In a 1986 GMC I would expect to see an 8.2 liter Detroit if it had a diesel. 1986 should be new enough to have the changes made on it to be reliable. I do not own one, but it seems to me that everyone that does is happy enough with the performance, reliability, and mileage of the engine. Heck, Detroit Diesel called it the "fuel pincher." It was widely used so parts and competent mechanics (should the need arise) should not be difficult to find. Just remember that it is no longer produced so like many of our engines the local NAPA or Carquest might not necessarily have parts on hand.
The trans is most likely an Allison AT545. You can search and read about the differences between it and the MT643, but suffice it to say that either one will be fine.
Check the bus over real well. Rust is the enemy. Look for service records. Take it for a test drive and make sure it runs at speeds you are happy with. Then offer him less than $2500, sign some paperwork, and drive it home if you like it.