I think in your case it has a lot to do with gearing, power band and no doubt actual horsepower, not claimed. My guess is the old one is not making 120, but even if all things were equal, 120 vs 174 is huge.
Torque is simply how much torque the eng can generate, like if you put a 12" long wrench on a bolt, how many pounds of force can you put on that wrench. If 100 then that's 100flbs tq. Engines don't really make a lot of torque when you get to thinkin about it, but what they can do is make it while spinning really fast. Like I can easily make 100ftlbs of tq but I can't do it while spinning the bolt at 2000rpm, or anything that even resembles that #. Horsepower is simply how fast it can spin while applying said tq. horsepower is basically torque x rpm. That's where an engine shines and makes actual horsepower where I can't make even one.
Engines typically make max tq at a certain rpm, like for gas ~3000 but that # varies a lot, but that's also peak tq and it could make 95% that much from 2000 to 6000 while another eng may make peak at 3k but by 4k it's making virtually nothing. So the # can be very misleading. You really need a graph showing both tq and hp from idle all the way to where it doesn't, or "falls on it's face". Since hp is simply tq x rpm it's clear with the example engines that the first one makes more hp since it's making tq up at 6k while the latter one long since petered out.
So torque will make things happen, like get the car moving from a stop, but once you shift gears things change a lot. Say you have two identical cars with the above engines, car one shifts at 7k, car two shifts at 3500. Car two has to shift into 2nd gear at say 20mph, then third at say 40. Car one remains in 1st till 40 so from 20-40 car one has a huge gearing advantage and while the engines make the same "peak" tq, car one makes double the hp and that's where it shows, and in each gear after.
Ideally you'd put lower gearing in car one to net even more of an advantage, assuming you were drag racing.
If you did so with car two you'd still see the same lesser performance but since the eng speed is low then lowering gearing would further reduce its already low top speed. This is why higher tq/low hp cars typically have taller gearing, b/c otherwise they peter out before they got to 100mph. Taller gearing hurts lower speed acceleration so being forced to use it hurts the car even more.
Yet another advantage is the split between gears because when you shift from 1st to 2nd there will be an rpm drop, so of if you're petering out at 3500 then the shift to 2nd will drop you down to what may be below your tq band so you'll have to struggle to get back into it, then repeat w/ every gear. If your band is 2-6k then when you shift at say 7000 you end up well into your tq band and you're pulling 100%. So not only did car one have a gearing advantage the whole time thanks to rpm (horsepower), but also higher tq available at all times except for that brief moment when each were n first gear at 3k.
So it's not that they're different things, it's all torque, but how fast and for how long you can wield it. It's like a two dimensional object and someone asking if X or Y is more important. If you want the biggest 2D object then you want the most of each that is possible b/c X times Y nets the actual size. Ultimately in the end it's horsepower that is the ultimate # because it represents work, but an engine doesn't stay fixed at that one peak hp rpm, at least not until they make a tranny than will allow that. This is why the eng should ideally make good tq thru a wide rpm band so it can have that tq all thru the gear and onto the next, and the higher the rpm it all takes place means lower gearing can be used and thus more leverage.
Now if not in a car but on a stand hooked up to some single speed pump or whatever work you're making the motor do, as long as it's all done a one speed, the engines peak hp rpm is where you'd be for max power.
That whole having to grunt its way thru the rpms and the gearing are why tq and the tq band are important.
Fyi in a chart 5252rpm is where the engineering units we know as torque and horsepower cross on a chart. It means nothing other than if you make 100ftlbs at 5252rpm then you're making 100hp. If you make 100tq above 5252 then you're making more than 100hp, like double 5252 is 10504 at which time you'd make 200hp. If you made it at half 5252 which is 2626 then you'd be making 50hp.
So you could also have an eng that makes 500tq but at such a low rpm and for such a narrow rpm range that it's useless. I would be a perfect example; with a long breaker bar I can make 500fltbs but at only say 2 rpm I'd likely only get a car up to ~1mph. A lawnmower engine making 5ftlbs tq but at 4k will push the car much faster. 500 x 2 = 1000, 5 x 4000 = 20000. That's not the actual formula for hp, just a simple example to make a point about the relationship of tq & rpm with each being equally important.
When it comes to diesels they like to brag tq because imo they have low hp. Gas guys brag hp b/c that # is higher, but also b/c a normally aspirated eng's tq it pretty much locked to its displacement, so hp is basically how you high can you spin it while making tq, which is horsepower, which again is the net sum of tq and rpm. So imo bragging about tq w/o rpm to match is like bragging about your dik being 10" (but not mentioning it's 1/2" dia).
This is why diesels usually need to forced induction, since the rpm and resulting hp are low they add boost to bring up the torque since they can't bring up the rpm. Boost makes more hp but only b/c it boosted tq, and as long as rpm is below 5252, and it is, the tq # will always be the bigger #.
If the math were different, or gas engines made less hp, diesel guys would be bragging about hp.