I'm looking at picking up a r56s that will need a new engine, what place sells reliable engines for swapping in?

However you look, unless you get lucky, they will typically run you $2.5k-$4.5k easily. Car-parts.com has some, but your luck may vary. I've also gotten into that situation, but after all the research and digging around, it's likely cheaper to just take the engine apart and rebuild it back up.

Junk yards for used, but you have to dig around for good ones. For rebuilt performance engines sneed4speed.

so for an engine that has no compression, pick up the engine rebuild kit from sneed4speed and go for it?

Best if you open it up and find out why you have no compression. I could be warped head, blown gasket, bad/burnt valves, or failed piston/rings, etc.. If you know what broke, then you'll be able to minimize your purchase. However, if you're pulling head, it's more assurance and peace of mind to replace most gaskets, new bolts, etc.. It depends. But however you do it, if you're mechanically inclined enough to pull it off, you'll save some money even after purchase of some special tools.

I have an excellent low mileage 2013 N18 motor for sale if you are still in need. Also, I have had good luck with http://www.car-part.com/