Take it to a local garage to diagnose the problem, it should cost you nothing. Then you will know what's wrong and where you stand. We could be sat here all week guessing what the mystery goop is and it won't help you
Its difficult diagnosing a fault from a picture of a patch of fluid on the ground, if you can get it diagnosed we can probably help you fix it cheaper
The Puma engine is a popular conversion, but I'd go for a 2.0 Zetec, or if you want to do it properly, a Mk1 Focus RS 2.0 Turbo.
Anything is possible if you have the money and/or skills, for instance I know of a KA fitted with a 2.5 V6 Vauxhall engine.
Don't forget to check with your insurance how the changes would affect your premium, that could well scupper your plans!
My Turbo converted Mk4 Escort Bonus was dearer to insure than a proper Mk4 RS Turbo, they don't like you messing too much.