When you say it "lags" when you nail the throttle does it pump out lots of smoke or not? If it doesn't it's too lean, too rich if there is a lot of smoke.

I'm not quite sure what it means when the engine cuts out after you let off the throttle, i've never come accross that particular problem with any of my engines. Adjusting the low speed needle according to the above statement (the smoke bit) should solve the problem, my guess is that the engine is too lean on the low-speed needle.

I've had a quick look at the .18 Infinity engine, it looks OK, althought it is definately not in the same league as OS engines and the like. If you tune it correctly it should be OK in your buggy, and i suspect it will produce more power than the stock .16. If you do decide to get the engine, make sure you get the correct type of carb and crankshaft - match it up to the stock engine.

PS. The ebay link you posted works out at £42 SHIPPED for the engine - not too bad considering. Even if the engine isn't great it's still only £43...