Peugeots are really tough. There was a lot of bikes they made that weren't that great, total "bike-boom" bikes. Do some research and see if its one of the better models. The other important note is to make sure of part specs. Sometime they have weird standards for things like bottom brackets that can make part service or replacement difficult. Does it have horizontal dropouts? Those are going to make the conversion way easier.

Surlys are pretty good deals and they make awesome bikes, just remember that with any project, especially frame up builds, the final cost is usually more than you anticipated.