I had an '89 S10 w/ a 350 in it (355 after rebuild).. keep in mind, its a bitch to get traction, and a stock s10 body will flex like all hell. It was fun, but I didn't keep it very long. All you need is a solid 4-core radiator, the smaller starter, a good transmission, a TH350 should bolt right up to most chevy small blocks, and handle most power you can throw at it. Just no overdrive.
The in-dash speedometer is mechanical in the 86 I think, so you should have no problems hooking it up to a th350, just need to get the right gears for it. The links ForceFed gave are good places to start, s-series.org/s-seriesforum.. you will need the motormounts and headers, and probably a very large hammer to "clearance" the firewall (read: bang the piss out of to make room for that motor!). Very fun trucks, and quite reliable if you don't cut corners.