If the garage are sourcing an engine for you, it'l be from a scrappy, then they'l add on a fair wack on top of what they paid for it, its there way of making money. It always works out cheaper for you to source your own engine. If they were to get one from VW you'd be looking at a bill of thousands! An engine from a scrapyard will definately want a cambelt kit fitting, as you won't know the history of the car and most garages will insist on fitting a kit, cuz if the belt snaps a mile or two after you take the car back they don't want any comebacks.
I'd ring round your local breakers for an engine (they were fitted to mk4 polos too), you should get one for 100quid or so. Cambelt kit from local motor factors will set you back around 50quid, also a water pump is advised, theyre about 15-20quid. Also a clutch maybe worth fitting depending on the wear on yours (about 70quid) Then any decent garage (around here, london may cost more) should charge around 150-200quid to fit an engine in your car, don't be ripped off, an engine can be replaced in a day on these as its not at all difficult as the whole front end can be removed in an hour, unbolt/unwire everything, wheel the engine out on a skateboard, wheel new engine in, bolt back up.
Its up to you, but I'd defo source your own engine, then at least you'l have more of an idea of its history/milage.