Okay, here’s the 1990 Levara in stable, and the engine does indeed fit. It’s a 2.3 liter inline 4.
As you can see, the engine fits snug as a bug in a rug, and doesn’t look absurdly shoehorned in either. If the car this is loosely based on (Mitsubishi Galant) can fit a 2 liter four-banger no biggie, an extra 300cc shouldn’t be a hassle.
I remember at one point you guys made engines appear a bit larger in engine bays–I don’t know if that was a long time ago, but it might be causing this in some way? Just a shot in the dark, probably wrong as I don’t think the engine’s visual size has anything to do with the engine bay filling calculations.