Dont be put off by the 1.8 - we have had our 2004 Freelander since April and its been fine. We have been all over the country in it, including taking 4 people, plus luggage (boot and roof box) on a trip to the highlands of Scotland and back - all one one headgasket
We managed to get a very good specc'd facelift model with reasonable mileage for 2K less than a high mileage diesel equivalent. Bought AA warranty for £11 a month which includes breakdown in case of any nasty surprises. To be honest the engine is the least of your worries - Diffs, VCU's, IRD's are far more expensive and complicated than the K series!
Would I be without the Freelander? No! We live down a single track road with a hill at the bottom and the next doors RAV4 is at the bottom of it stuck in the snow - the Freelander is outside the house! They are a 4x4 that works and works well! I've driven it in snow, mud and across a field and never had a hint of a problem getting traction.