I like old Peugeots but this is an easy choice. Rebuild the Bianchi Backstreet and ride it. It has a better frame and it will be easier to find parts for (except that suntour cassette will be tough to replace; if that goes, you may be better off getting a new rear wheel). Plus it takes fat tires; this is a hybrid right?
If you like the look of a vintage bike, there's nothing wrong with rebuilding that Peugeot, though. It has some oddities but we can talk you through that.
Last edited by bikemig; 05-19-20 at 09:42 AM.