I didn't mean any offence with the Subaru comments other than "if you think an Impreza is good you have a lot to look forward to". I certainly have no desire to perpetuate an argument about them, save to say "how does 12k for a year old car sound?" Like a recipe for losing 4k a year in depreciation over the next 2 years.
Back to the 944 and I think your budget is on the cusp. Many of us have said before that you should keep money back when you buy a 944. In my experience about 1,500 notes is realistic to get the mechanicals into shape. Unfortunately the single Achilles heel specifi to the S2 (shared with the other 16v model; the S) is the dual camshaft design and that will very likely swallow a grand or so if it needs attention. In my personal experience of 2 cars it has been needed twice, and in the 5 years since I last bought an S2 it can only have got more likely.
Basically you might find a decent S2 for your money (and be careful as you could find loads of less than decent ones), but it might need significant money spent on it. On the other hand you might struggle to find a decent Turbo at all at that price. Note that you can get a Turbo from '86 and an S2 from '89, so while they ran concurrently to '91 the Turbo was around for a lot longer. An early Turbo is a 220bhp car with the same chassis as an S2 (basically) whereas from '89 the Turbo had 250bhp, bigger brakes, LSD, stiffer suspension etc. All Turbos had air-con and most had sports seats (most later ones with leather) whereas most S2s had cloth and no air-con. Both of mine had sports seats, but they are less common than in Turbos also.
All that said however I wouldn't recommend a Turbo to leave standard and I wouldn't recommend an S2 for anything other than leaving standard (except suspension upgrades), as they are very different to drive. What will you do with the car? The answer to that defines which of the two you should look for.
I've never even driven a Lux, but people who have "upgraded" say the lighter car is sweeter to drive, though clearly it doesn't have more than average power these days. Also they are abundantly available in your price range and it would have to be a very, very special one indeed to break that ceiling. They are also less likely to have expensive sill corrosion (because they don't have the same plastic muck-trap along the bottom as the S2 and Turbo).
It's difficult to recommend a course of action really. You might find a good S2 that you can just use at that money, but you could end up with something that while not a money-pit long term might need a bit of money spent on it to get it right. Of course you could also end up with a money-pit good and proper. You could on the other hand get a very nice Lux, though price doesn't always reflect quality and there are some nasty ones around also, but at least the budget stretches to the better cars. Lastly if you have any plans to make the car go faster then you really want a Turbo and you probably won't find a decent one for the money unless it's an early 220 car.
I'd echo the advice to steer clear of dealers because there just isn't the margin in a 3,500 Porsche for them unless the true value of the car is a couple of grand dog.
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