Thanks Mirage.

A library is something that allows you to make an engine or any other type of program. It only has the basic functions or interface to an existing API. An engine on the other hand is an already built system from which you would need to modify to make a different game or program with it.

ie. Quake 2 Delphi is an engine. DelphiX is a library.

The concept of an engine is that it already exists in executable form. The bulk of the work is done for you where as a library doesn't have any of that, you'd have to use it's functions to make or add to your project.