You could put a gti-6 lump in from the 306 which has been done but not many about. IIRC about 167bhp standard. Or a cheaper option would be the J4 from the GTi and VTS, or the JP4 engine from c2, 207,307
Weight loss is free and a car start to make your car feel quicker.
Lose the headlining, back seats, door cards, sound deadening (behind dash also), carpet, underlay...and if you want to go all out like a member on here cut the passenger side of the dash out

. Remember keep anything you strip out as the next owner may want them and is easier to sell a car with a full interior. Also you need to have door cards etc fitted to go out on track.
Start with;
Cams
4-2-1 manifold
Decat
saxsport / kam racing system
Good induction kit (raceland, BMC)
Re-map
Then maybe;
head work
Lightened and balanced flywheel
Fast road clutch
(you can also use a different gearbox with shorter ratio’s. 1.1 or 1.4XSI boxes are used alot, the 106 S1 rallye box is a good option but hard to come across)
After all that has been done if your budget allows look into;
Throttle bodies
Boost. If you are running high boost you will need forged internals
Or maybe look into getting a 1800 stroker engine and working with that?
Don't forget though that when modifying an engine and the cars performance speed wise
Please please please also upgrade your brakes and suspension set up
That is imo MORE important than how fast your car is or your BHP figures. A well spec'd car with crap suspension and brakes is not better than a standard car
To get the best from all mods make sure they are all set up correctly
Brakes to look into will depend how high spec the car is
306 GTI-6 set up
wilwood 4pots
406 coupe bermbos.
Hispec 4pots
Make sure you also choose a good set of pads to go with it. Kam racing have good pads on there site. e.g mintex 1144 pads.
Good brake fluid
Braided lines
Suspension;
B6 dampers are uprated at o/e length
B8 dampers are uprated like the B6 but shortened.
Grp N dampers are hard as nails
The Peugeot Gti sprintline kit comes with the B8 shocks
The Saxo sprintline comes with Group N fronts and B8 rears.
The Group N kit comes with Group Ns front and rear
Use 106GTi 24mm rear bars