I K7 engine will slide right in in terms of mounting. There are 2 issues you might need to contend with.
1) The output shaft is different. The K7 "wants" a 630 sprocket. A 530 sprocket will fit but the sprocket is wider where it meets the shaft. My guess is (and folks here have said it in the past) that you can use the K7 bolt and washer arrangement to hold down the K6 style sprocket. With the 630 sprocket (narrower), the washer seats up against the shaft and the sprocket. When you use the wider 530 sprocket, the washer meets up with only the sprocket. There may be compatible sprockets sold that take care of this issue (possibly cyclexchange.net).
Here are the sprockets side by side to show the height difference:
530 on left, 630 on right


2) The K7 and K8 bikes have studs at the exhaust port where the pre-K7 has spigots held on with phillips screws. This is relatively easy to remedy if you can get the studs out successfully and replace with the screws and spigot arrangement.