As I'm sure you've figured out by now, NEVER sell ANY car part with payments. If they/you want it bad enough, save up!
As per your current predicament, unless you guys wrote up a contract signed by both parties, YOU have no legal leg to stand on. You just may have to go ahead and sell it, pay him his 'deposit', and deal with his immature animosity. You might even consider going to the police to at least make them aware of any physical threats to you if he so chooses that route. No matter what, from now on, any contact/conversation you have with him, YOU should a witness with you. No matter what, stay cool calm and collected and just state your intentions. "Pay the balance by (date) or I sell it for cash after which you will be paid back your deposit in cash". He also owes YOU interest on YOUR money that you could have used if the engine had been paid for in full, even's out I'd say.