even if that motor was originally bought by a drug dealer...he/she worked for the money. they took the risk, they played the game, they made the money. legal or not.
you go to a casino, you win or you lose. you deal, you win or you lose. it's all the same in the end. if you got the paper, you win, no matter how you made it. you could get caught the next day and lose it all...or you could work your ass off for it and get it stolen.
if you don't buy it, someone else will. if you do buy it, you might get stopped one day and the cop might be overly inquisitive and check VIN stamps. you definitely don't want that. or, if you live in one of the few states that require engine serial number checks for inspection stickers (cali does at least) then you're screwed.
it's a risk that you gotta weigh. nice engine, low $$$, higher risk. do what you gotta do. it's stolen...but it's still a B18C1 for a g...