268 Islander info needed

Arguably the best option for the 268 with the short running surface is the Mercury 150. It is as light as the old 2 strokes, makes an actual 162 hp, and is a full 3 liters of displacement. Member barclyr did this repower and has details here and on THT. The only downer of the Mercury is no electronic control option. Suzuki does, and makes them in a 200hp model, but they do weigh a bit more than the Mercs.
 
I had a '99 268 Islander. Great boat and had it for 18 years with very few problems. Definitely inspect the transom. Also with twin 200's I'd make sure it isn't over powered; which with a bad transom will decrease the boats safety significantly. Mine had twin 150 two strokes and the scuppers sat below the water line so also look at the condition of the deck drain hoses. If they're under water, they will need replacing about every 10 years or sooner.