Out of those two options, id probably bite the bullet and reco the whole thing, having said that, have you considered an engine swap?

Put a j18 or j20(with a j18 flywheel)?
Possibly a j24 will fit (with a j18 flywheel), but need to check the bellhousing.

Option 4: Find a cheap written off baleno with low K's and rip the engine out of that and transfer the vitara accessories on to it?

I would pull the head off and have a look before deciding on anything else - cost = zero to this point. This will give you an idea of the condition of the bores and the head, G16b's like to crack heads if the cooling system isnt up to scratch. They typically crack between the valve guide and the welch plug. Theres a reason most of the vitaras at my local wreckers are missing their heads. If thats the problem then you could rebuild/replace the head now, and then get the bottom end done in 12 months or so to spread out the cost, its double handling things but an option to consider.

I think complete engine rebuild is your best option... and personally, i would do drive in, and drive out, i like that if anything goes wrong, they have to fix it at no charge, if you do it, and something goes wrong, it will just cost you more time, effort, and money...

I'm pretty sure the experience doing it yourself is much more than any amount of money could buy.

I'm going with either find a low km motor you can drop in or rebuild it yourself Mitch - which one you goes for probably largely depends on how long you can afford to have it off the road (it is your daily isn't it)?

Least with a motor swap you can have it all done in a weekend easy.

Don't you have a motorbike now Mitch? You have all the time in the world to rebuild you engine if so

Hey Jester,

thanks for that, is there going to be any advantage using genuine components over aftermarket? (bearings/rings ect). its hard because you dont know if you can trust the brand that the machinist give you. Did you have to do much with your head?

so at this stage its looking like ill be pulling it out, im really hoping that the block isnt cracked and head is ok.

Mitch you're a mechanic... lol rebuild it yourself or drop in a transplant (IMO full rebuild would be better as you know everything about this engine).

well we trust our machinist, they do excellent quality work, they target their business to performance builds, so mine was simple, one of the blokes at work (now retired) had been using the owner for 20 years plus.

with my head, i had the whole lot done, valve guides, grind. I just told them to go over it and anything that was required to do it, I just wanted my motor all sorted

I'm not a mechanic.
I managed to do a Baleno import donk into my Vitara.
The EFI, pipes, tubes, wires etc scared me shitless.
I took heaps of photos, so it was easier to work out how to reassemble it.
Had AZ on speed dial, too

Getting started is the hard bit.
Once started, you have to keep going

My suggestion is rebuild a block and head that you know is good,
then fit it once its done.
Less risk that way.

I very happy with the Baleno engine,
but it would be good for you to build an engine for experience

I'm roughly in the same boat. Suspicious head on my g16b in my Sierra. What's this talk of using a baleno engine and vitara accessories? Can I please get some more info?

Yeah thats what I meant.
But if you not in a big hurry, your way is just as good.

same block & cc size so it should just be a phone call to notify them of the replacement engine.

Pretty sure in W.A an engine number change requires you to go over the pits. Not sure though.