If it is actually in pristine condition why not a new motor? If it's a pig put an ad in Craiglist for best offer and start over.

 

worse case scenario; the head has been replaced and PO couldnt fix the low oil pressure without dumping more $$ into it so they dumped heavy oil in it to unload the problem on someone else.
I say that because I cant see a XJ with 83K in the condition you describe being let go for $4k unless they told you up front it had low oil pressure. IMO,$1k for a bearing swap seems pretty steep when you should be able to find someone to rebuild for $1500, or a reman for a little more, I'd prefer a rebuild myself providing I get a warranty.
Diagnose it the best you can then weigh your options from there

 

short go .... change the main and rod bearings take emery cloth to the journals for a little clean-up. You can do this one journal at a time with patience. just surface the crank, don't take extra metal!!! use loc-tite on the bearing seating surfaces (not the face) to avoid spinning them. Cross your fingers and fire in the hole..... check your crank size though you may need to change bearing size, and they can be gotten in all sizes not just 10,20 or 30 over

 

Where are the cheapest places to get remanfactured or rebuilt engines?

 

A "friendly" machine shop may have one that never got picked up for cheap around 600 to 1600. For a drop in, wreckers 250 to 1200 with a warranty you want ones that offer 90 day, and they may even do the install for you cheap (used loosely) some machine shops may have a short block and a head separate and that can save a few more dollars.

 

Doesn't sound like that engine is worth messing with ,a good long block or salvage yard motor would be easiest.

 

I can agree with you there, but you have to weigh all options in this economy...

 

I agree. I'd hit the salvage yards and try to find a lower milage clean looking XJ that was broad-sided or rear ended and written off as a "total" by the insurance company.

 

I believe one of those would be the most economical option.

 

junkyard motor. $400. Just makes more sense. Then you can mess with the other engine when you're not on a time restraint, get it fixed, and get more out of it then you paid for the replacement...