I just shipped an engine out and got good feedback by the purchaser once it arrived. He said it "looked just like a new box".
This engine still had bed plates attached and a girdled cylinder head. Tapped up all the holes and double trash bagged the engine.
I then took a 16x16x16 box. Lined the bottom and sides with styrofoam sheets. Place the engine inside of the box, then filled the rest of the void space with packing peanuts. Put a styrofoam sheet on top. Then taped up that box. I then took a 20x20x20 box and again lined all 6 sides of the box with styrofoam sheet, placed the smaller box inside, and filled all the voids with packing peanuts. Total weight was something around 64lbs.
Total packaging cost totaled $20.
I purchased all the material from a store called "The Packaging Store". Next time I might try what the owner suggested. He said he'd probably use a 18x18x18 box and do that spray foam (sometimes called foam-in-place) all around the engine. He said he would have charged $30 dollars including box to do the foam-in-place.
http://www.gopackagingstore.com/Our_Services.asp#FoaminPlaceCustomFoam