BP4W Engine 1.8 Engine

I was looking for a winter project to tinker with and my wife wanted a “silver” car that was small and sort of sporty… so I bought an Mk2 MX5 with the engine/gearbox out of it and the bits/parts in the boot with the clues being I gave the car to my grandson and it now has  “blue smoke and a knocking noise” we took the engine out to repair it and he has lost interest…The car only has 37K on the clock with the . Never driven it never driven a MX5…I can hear you all now saying “are you mad!”

Anyway in an attempt to have a look at the engine it turns over ok on the crank, took the head off and noticed No3 had oil deposits on top of the cylinder also on exhaust outlet traces of oil. 1 & 4 clean as a bell (grey) and 2 starting to go blackish. No obvious scoring on the cylinders and no lip at the top showing signs of excessive wear all clean and tidy. Put all cylinder levels and poured equal amount of new oil on top of cylinders to see if any leakage down through left for 4 hours - no leakage at all.

In the meantime visually checked all values were seating properly which seemed ok and also checked the head gasket which didn’t show any signs of tracing/blowing etc. Next step for me is to take valves out and check guides/stem seals etc.

Ok where this going - What else should I do before I make the decision to buy another engine?

If I can’t find anything obvious, which it’s looking that way, what engines are compatiable? eg Can you fit a 1.8 from a MK1? Can you fit a 2001 VVT engine? etc etc

Thanks for responses in advance!