The engine is indeed currently resident in a race car - a 1920 Siemens Protos to be specific. Apparently, the car ran at the opening race at Avus (near Berlin) in 1921. It was thought lost and then found in a building to be demolished in 1993.
As a German car that ran in a German race and was stored in Germany, the American engine is a puzzle. Our guess is that it came from an American military vehicle but we don't know when it might have been installed. The idea of a Continental engine from a military vehicle in the 1930s or 1940s could be a fit.
There are a bunch of photos and even some video clips out on the interweb. Just do a google search for: 1920 protos siemens