what place has codes that allow a furnace to be placed in the garage? fire codes in a lot of places do not allow this due to fumes from cars getting into the house through the ducts and the chance of a gas leak being ignited by the furnace.
and the flue size is for the current gas appliances.(unless the gas man says otherwise.) and a new vent would have to be run.
there is a sealed gas furnace that uses the exaust piping as a radiant heat source.