As stated in the title,

Would A MKII Polo Engine Fit In A MKI Derby? i.e. would the mounts need to be changed or should it fit?

Yes

yes it will drop straight in, if you are converting to 5-speed you will need the top gearbox mount, anti-roll bar and possibly gear lever/selector rod if you still can't find 5th.

Indeed it will - I've fitted one to my own. The MH engine is simple enough to fit and in plentiful supply, the early mk2's had the same mechanical tappet engines as the mk1, albeit with a few detail changes. The later engines are quieter and require less maintenance though. For the five speed box, a cut & shut of the mk2/3 5 speed linkage with the mk1 lever works like it was OEM.