Just a few clarifications on the VW biodiesel front.
First, the pre-2005 TDIs are the ones that are getting 50+ MPG. With each generation after 2006 the mileage keeps going down, with the 2009s getting in the 30's (boo). So buying a used pre-2005 will get you the best MPG for your buck.
ALSO: VERY IMPORTANT: owners of the new 2009 TDIs are reporting issues with the use of biodiesel, namely that the formulation messes with the computer's expectations of emissions and causes engine problems, Check engine lights etc as a result. Those in the know are recommending early 2000's models for this reason.

Anyone looking into purchasing a diesel vehicle should read through the TDI 101 thread on TDIClub before buying. There is much you should learn before buying because you are essentially putting your car on a special diet- no switching back and forth from D2 to B100.

Lastly, there are other added benefits to using biodiesel, such as the fact that most of the retail stations are co-ops, which means that when you buy your fuel you are supporting people in your community. Hybrid drivers are still giving their money to Exxon.
-Kristen Q.
2002 Jetta TDI, B100 for 60,000 miles

The other important factory to include is whether Tom is planning on buying new or used.  Obviously buying a used Mercedez or VW (that you can find in good shape) is the preferred way to go. There was far less energy put into those cars than a prius. I enjoy the number crunching but buying local and not borrowing from China to give back to the middle east..is FAR less of a footprint.  

Is biodiesel THE answer to global climate change? No. But it is part of the solution? Absolutely especially when your using recycled fryer oil.  And once algae is understood we will be on our way to a cleaner planet.  The answer for you Tom is what is avail to you in your surrounding community, can you find a reliable auto and where will you be getting your fuel from?  
Great question (im not a prius hater..just a lover of my 83 mercedez 300TD..20K on B100)
If you want to get a general quick grasp of all things biodiesel..the bible to check out is From the Fryer To The Fuel Tank

Driving guilt free,
Gerard  LA CA

Something the answer hints at is the fact that the Prius will put off almost no smog-forming pollution, while the diesel will put off a lot.  I love the relative simplicity of diesel engines, but I opted for the Prius because of the smog-forming emissions.  I made that decision despite living in the relatively clean-air state of Florida.  Someone in Boston should (in my humble opinion) put extra weight on the emissions factor because of the pollution problems in the Northeast.  Pollution is still killing people, and diesel is producing a lot of that pollution.  That holds true in most of America's major cities (Houston, Dallas, LA, ATL, etc).

Yes, the new diesels are cleaner than old diesels.  Yes, biodiesel reduces some emissions (while increasing others).  The more important thing to consider (in my humble opinion) is that the Prius will put off 90% less (perhaps even 98% less) pollution than a diesel.  Please sift through the smog-forming emissions at epa.gov/greenvehicles

I appreciate the attention to home insulation, though.  For someone in Boston, battening down the hatches would yield impressive savings (monetary and planetary).

Recycled vegetable oil negates the demand for virgin stock and does not cause forests to be cut. Many stations, including mine, purchase only fuel made from recycled vegetable oil. Your supplier will be able to tell you if the oil they use is recycled or virgin. If they don't use recycled, pressure them to find some. There are plenty of potato chip factories in the US.

I'm not convinced that giving one's money to agribusiness is a better choice than giving it to oil companies.  They're symbiotic at best.

And thank you, sje333, for reminding us about the link between biodiesel and asthma!

If you're going to make MPG comparisons, it's vital to match vehicles with comparable capacities. The VW Beetle TDI is classified by the EPA as a subcompact car, with only 85 cubic feet of passenger volume and 12 cubic feet of luggage volume. If that's plenty of space for you (as it probably would be for me), fine, but it's hardly comparable to the current Prius, which is on the low-end of the EPA's midsize range with 96 cubic feet of passenger volume and 16 cubic feet of luggage volume. The current Jetta TDI is a more comparable vehicle to the Prius, but it still only has 91 cubic feet of passenger volume (plus 16 cubic feet of luggage volume). The Passat (96 cubic feet passenger volume) is the most comparable VW to the Prius in capacity but apparently it's not currently offered with a diesel powertrain.

Umbra's answer also neglects to address the impact of biodiesel from food crops on biodiversity, food supply and prices. If you can get it made from waste veggie oil, that's another matter, of course.

Don't forget to

(1) re-run Umbra's numbers with the actual mileage of the diesel vehicle you would purchase. The carbon numbers of the diesel look a whole lot better if you assume 50 mpg (which is what I get with my 2004 VW Jetta TDI than if you apply EPA numbers for this particular vehicle: 31 city, 42 highway).

(2) Whichever vehicle you choose, drive it like you care. Learn hypermiling techniques and apply them assiduously and with gusto.

And:

When you go to TDIclub.com, don't spend all your time in the TDI 101 Forum dwelling on maintenance and repair issues. Head for the Fuel Economy and Biodiesel forums, which is where the fun is.