Well, it looks to me like ytou enjoy fabricating and making it your own, so as far as recommendations for a motor... if you want to go four stroke and do it on a budget, check out a thread I'm doing right now on the same frame you have...
No frame modifications or welding is involved.
If you want to go with a 2 stroke kit I would suggest Pirate Cycles and their PK-80 engine. Of the several China girl motors I've had that one stands out as more powerful and put together a bit better. It is set up with mounts for wider frame tubes, but is easy enough to adapt the mounts without much fiddling. Pirate Cycles is a good outfit and stand behind what they sell. They are one of the vendors here.
What do you want the bike for? Occasional riding or for more serious transportation? Flatland mostly or real hills to deal with? Is this a winter project for riding in the spring and you're willing to invest some time in it, or do you want this on the road as quickly as possible? A simple answer isn't easy. I'm guessing you'd like to keep the budget down some... is $300.00 tops? $500.00? (not counting what you have in it already). If $300.00 is it then I'd go with the China girl. If you want a more serious ride then I'd go for a four stroke which you can still do on a budget. I have several rides to choose from, 2 stroke and more recently 4 strokes as well. I find myself wanting to ride the four strokes... smooth with lots less vibration, nice thoaty exhaust and feels more like primitive motorcycle than just a bicycle with a motor. Either one can work for you and be a whole lot of fun.