If it was my boat, I would use Corecell M80 on the sides, and probably M100 on the bottom. Balsa has many strength advantages, but if it does get wet the core can rot in that area. Also it is significantly heavier than Corecell.
For an engine I would pick the Scania DI13. I have not found Volvo to be particularly well engineered, and parts prices are terrible. IMO, Volvo looks at customers as stupid cash cows, who do not know they are being reamed over and over. On average I have found Cummins to be far more reliable over time than Volvo. Cat somewhat more reliable. Scania has a super reputation, but I have no personal experience with them. I was a boat mechanic and shop owner for 20 years.
However I have no experience with the Volvo D13, it might be a great engine. Also if you potentially troll in the 2-4 knot range, check into which gearboxes are available. Twin Disc and ZF have electronically controlled trolling valves, with auto kickout if the throttle is increased. If this matters, make sure the D13 transmission can do this.