whats the best way to fit a vauxhall 2.0 16v lump into a mk indy and what bits do i need?

gearbox? type 9 with modified bell housing or manta box? manta box would be cheaper option i reckon
whats the difference in output shaft connection ? or do i just get the UJ and weld it on to a sierra prop?

does the sump need to be shortened or not?

ideally i could do with LSD as planning in the future for throttle bodies- which sierras came with lsd? is it only xr4i's? if so i believe i have to use larger shafts and the disc rear hubs? can the cv joints not be swapped so i can use the drum setup ?

anyone got any pics of 16v in a mk indy or locost chassis ??

First, the gearbox. You can use the type 9, and purchase a modified bellhousing. or get the Getrag (Manta) gearbox, I assume the latter will go in an Indy chassis, but dont know for sure. IMHO the type 9 is the best route (but perhaps not the cheapest) as there is more upgrades available for the Ford box.
The prop will need to be shortened/modified whichever route you take.
The sump will probably need to be modified , as the XE engine is quite tall. Also, it is designed for transverse installation, and the standard sump may allow oil surge. Again, there is a couple of options. Rather than trying to modify the standard Ally sump, you could get a sump off an 8v engine, which is steel, and chop accordingly. Another option is getting a Manta sump, which is alloy, but has 'wings' either side to carry extra oil. Lastly, you can purchase specially designed sumps off SBD, W*******d etc which are a lot shallower.
LSDs were fitted to the following Ford Sierras.....
4x4, all Cozzy variants, 2000E, and were available as an option on most other variants (although its rare, always worth a look at you local scrappy). The Granada also has the same type diff fitted, and LSDs can be found in certain models of these too (Cozzy, 4x4, 2.9 etc) Just to complicate things a bit more, there are two sizes of diff, the 7 inch and 7.5 inch. They can also be fitted with slightly different size output flanges/CV joints too. Best one to find is the 7 inch (measured across the top mounting holes)as they are lighter and will cope with silly amounts of power.
P.s, the driveshafts are not interchangable between drum and disc types, which as you suspect, go hand in hand with the type of diff.
HTH Stu.

so all the 4x4 sierras had lsd?

There are 2 types of LSD from the fords, ones which use plates and ones which are viscous. I was told the plated ones are best (easier to set up/maintain) which i think were only in Cosi's.But I have bought a viscous one from a XR4X4 as it was cheaper.

But yes, all 4x4's had LSDs.