On July 17, 2004, at 1030 central daylight time, a Varga 2150A, N8422J, operated by Winterset Aviation Services Inc., as an instructional airplane, received substantial damage when it impacted a soybean field during a go-around from runway 32 at Winterset-Madison County Airport (3Y3), Winterset, Iowa. Visual meteorological conditions prevailed at the time of the accident. The 14 CFR Part 91 instructional flight was not operating on a flight plan. The student pilot sustained minor injuries and the certified flight instructor (CFI) sustained serious injuries. The local flight originated from 3Y3 at 0830. The student pilot stated that he and the CFI were simulating a power failure landing with the CFI at the controls. They entered the downwind leg of the pattern about 1,900 feet mean sea level or about 800 feet above ground level with the throttle at idle. The CFI handed him the emergency checklist to run through an "engine failure landing" during which he shut off the fuel from both tanks. The student stated that he was not looking outside the airplane while going through the checklist and was not quite through with it when they were almost over the runway. Just as they were touching down, it appeared a wind gust prevented a "straight lined landing" and they drifted off the runway onto the grass. A bump was ahead on the grass area, and the CFI applied full power and took back off. The student pilot stated that he did not turn the fuel selector back on, and the engine quit. The CFI pumped the throttle and asked if the fuel was off. The student pilot stated that he did not have time to react to turn the fuel on. They were about 50 feet above ground level and impacted a soybean field north of the runway. The CFI stated that he explained to the student that they would go through the checklist and securing the engine, but they would just read those items and point to what they were doing. The CFI stated that they touched down a little hard and started to drift a bit to the right. The CFI added full power and they started climbing out normally. The engine then quit about 50 feet above ground level. The CFI stated that he immediately checked the master switch, alternator, fuel pump, magnetos, and pulled the carburetor heat. He stated that he was confused because they were still showing fuel pressure. He could not see the fuel valve from the back seat so he asked the student if the if the fuel was on to which the student responded by saying yes. The CFI asked if he was sure to which the student responded by saying yes. The CFI stated that they were out of options and were going to try to land on the field ahead of them; he stated that it was a bad spot. The CFI stated they had too much airspeed to turn left and land on a road and almost too little to make the field. The airplane hovered on the verge of a stall until it cleared the road. He then pushed the nose over a little in an attempt to build up some speed for the flare. I started to flare but ran out of altitude and the nose wheel hit the ground a little lower that the main wheels. The student pilot was seated in the front pilot seat. He reported a total flight time of 4.6 hours, all of which had been accumulated in the accident airplane. The student pilot reported that he was using the airplane seat belt and shoulder harness at the time of the accident. The CFI was seated in the rear pilot seat. He reported a total flight time of 4,942.5 hours, of which 60.3 hours were in the accident airplane make and model. The CFI reported that he was using the airplane seat belt but not the shoulder harness at the time of the accident. According to the Federal Aviation Administration inspector, the CFI removed his shoulder harness in order to be able to look at the front cockpit controls following the loss of engine power. The CFI received serious facial injuries. Inspection of the airplane revealed that the fuel selector was located in the forward cockpit.