Possible Duplicate:
Why is it usually “friend of his”, but no possessive apostrophe with “friend of Peter”?
We built an engine for the boat of Mr. Sander
or
We built an engine for the boat of Mr Sander's
?
Possible Duplicate:
Why is it usually “friend of his”, but no possessive apostrophe with “friend of Peter”?
We built an engine for the boat of Mr. Sander
or
We built an engine for the boat of Mr Sander's
?
If you had to choose one of them, you should say "the boat of Mr. Sander's". But I don't think you should use either in contemporary English. I would say
a boat of Mr. Sander's,
this boat of Mr. Sander's,
but not
*the boat of Mr. Sander's.
As was noted in the comments, it is much better to use "Mr. Sander's boat."
Why is this? I suspect because "Mr. Sander's boat" already implies that Mr. Sanders owns only one boat, so this phrasing is shorter and simpler and means the same thing. If you want to replace "a boat of Mr. Sander's" using a possessive before the noun, you need to say "one of Mr. Sander's boats", which is longer than "a boat of Mr. Sander's"; both are fine in contemporary English.
If you use the indefinite article, it's clear (to me) that you should say "a boat of Mr. Sander's" and not *"a boat of Mr. Sander".
And if you use a different noun, you see that "a painting of Mr. Sander" and "a painting of Mr. Sander's" are both grammatical, but mean quite different things.
As many people have commented, the simplest is:
Mr. Sander's boat
...and probably, the most preferred form.
Saying "the boat of Mr. Sander('s)" has the same usage as the Partitive case, where the boat is composed of Mr. Sander(s) in the same what that it can be composed of idiots (a ship of fools). Those less-skillful with the language will have a harder time distinguishing the two forms.
In this latter example, few people would interpret this as a Genitive case (a boat belonging to fools) rather than the Partitive case (a boat constituted of fools).
In your original examples:
We built an engine for the boat of Mr. Sander.
works just as well (or the best) since you need not use the genitive construction of "Mr. Sander" because "of" shows possession.
I think most people would find this a formal usage, where Mr. Sander is a man of some recognition.