Get a 6.5 Turbo Diesel and an nv4500. Or figure out a 6.2 diesel and retrofit a turbo onto it. You should be able to get the engine in and running for under $2k and spend the rest making it run how you want. There's something to be said for 20+mpg these days.
Either one should just about "bolt right up".
I agree with Fast Eddy. I've read recent reports of the latest 6.5 mil surplus motors being the Navistar blocks which are much better than what you'll find in the wrecking yards.
The 6.2/6.5 is a direct bolt up to the SBC motor mounts and bell housing. There will be a few changes needed to make the military motor compatible with your 40. Primarily, changing it from a 24V starter and injection pump to 12V. The military oil pan may need to be changed, depending on clearances to your front axle. The exhaust will probably need to be changed to pipe big enough for the diesel.
I bought a Chevy K2500 6.5TD a year ago and love it. I am now a diesel addict!
Don
