After putting about 60K miles on my 88 xj40 (now at 140K) I thought I should
do a post for those who might encounter similar problems. The jag-lovers.com
website was a godsend for me when it came to dealing with this car.

In chronological order:

Noisy differential-
Turned out to be the output bearings; Al's Jaguar of Lomita, California
replaced these for $450. He (Kent) is very honest and highly recommended by
me. This is the only work I did not do myself. Fluid was low; you need to
really crank down on the cover bolts to prevent leakage and check the level
if you see signs of leakage

Rear suspension self leveling shocks-
What a dream this car drives like after I replaced these with conventional
shocks; got kit off the internet for way less than the factory kit. Also
needed new rear springs.

Anti-lock failure message-
Faulty relay module per Jag-lovers website. Repaired module by resoldering
relay to circuit board.

Water hose failure-
There is a hose under the manifold that blew on me on my way out of Vegas.
Thank God for the low water indicator; I was able to make it to Baker (an
aptly named desert city) before I overheated. 5 years later this same hose
blew again on the 405. Really tough to get to, but can be done without
removing the manifold. Change it before it blows!

Door handles-
The engineer who designed these should be draw and quartered. I tried a
replacement off the internet that failed in less than a year. I ended up
repairing the two front handles myself using scrap metal and they have
performed well. I lubed the back ones after they got really hard to open and
that worked well.

Poor A/C performance:
There is a vacuum operated valve under the wiper motor that failed and lets
hot water thru to the heater when the diaphragm fails. You can and should
see it move when you turn the A/C on.

Wipers don't park-
Undocumented fuse behind the glove box

Faulty oil pressure readings-
I guess these cars have crummy pressure senders. I just don't pay attention
to it. I can hear when there is no oil pressure from the timing chain
rattle.

Loose front suspension-
Turned out to be worn upper shock bushing- replaced shocks.

No start-
Lucky this happened in my drive. Was bad crankshaft position sensor - test
by checking for AC voltage on the wires whilst cranking engine.

Starter pops off ring gear when cranking-
A problem that progressively got worse until after a few months I could not
start the car. Got a good deal on a new starter at a VW place that sells
Bosch stuff. Wow, what a tough job; getting at the bolts is nearly
impossible.

Tough to start, stumbling when car is cold and when its damp out-
Spark was "flashing over" from coil high tension to wire terminal. I put
electrical grease on the wire boot to fix this; however, the main problem
was that the plugs had never been changed and the gap so large that the
spark was finding easier places to jump.

Battery going dead-
This was a tough one to isolate. Turned out to be the switch in the door
handle that turns on the cylinder lock de-icer was stuck on. I just pulled
the relay since I live in So Cal.

Transmission filter-
This was probably a waste of time. On all the other cars I have done this
to, there was always a large amount of sludge in the pan and a lot of stuff
on the magnets. At 120k miles this transmission pan had zero sludge and
hardly any particles on the magnet and zero dirt on the filter.

Trunk leaks when it rains-
Turned out to be leaking by the gas filler. I cleaned the drain tube in the
rubber boot and that helped a lot.

Heater won't blow hot air-
Vacuum operated valve under the wiper motor was corroded and would not open.
Cleaned it lubed it.

Brakes-
This baby chews through brakes, but they are really easy to replace and you
can get good deals on pads and rotors on the net (www.ips-parts.com)

I guess that is a lot of repairs, but considering the fact that I got the
car really cheap because of the pre-existing problems, and the fact that I
can do the work myself, I have no regrets. It is underpowered but gets
respectable mileage and I love the way the car looks and drives.

Hope somebody will find this information helpful.

-jk