The flight instructor and student pilot were flying downwind for landing at approximately 1,000 feet above ground level with the landing gear down and the flaps set at 10 degrees when the engine suddenly quit. The instructor pilot completed emergency engine out procedures, established a glide speed of 85 knots and made a turn directly toward the airport. He said the “glide” speed seemed to be more a “fall” speed of 85 knots and any attempts by him to slow the airplane resulted in imminent stall signs. The airplane struck rising terrain and a fence on a golf course on the edge of the airport property and the engine was separated from the airplane. There was substantial damage to the airplane, but only minor injuries to the flight instructor and the student pilot, who were the only occupants. An inspection of the airplane at the accident scene showed no obvious signs of any pre-impact anomalies and a visual check of the airplane's fuel system showed adequate fuel with no obvious signs of contamination. A post crash quality check of the fixed base operator’s fuel supply facilities showed fuel that was clean and uncontaminated.