I found a pretty sweat 86 cherokee with the 2.5 iron duke for sale that i want to buy, but i also found the heater has no heat but theres water in the radiator so i assume heater core, no problem. i also found strange oil leak above starter on side of engine (i think) pretty bad drip cant tell exactly where from but i think its from the little panell in the side of the block some kind of access? anyone heard of this being a prob? other then that its got a 3 spead auto and 4x4. i own a 87 wrangler with the same engine and a 5speed and its ben great any feed back before i jump into this one?

I am having the exact same problem out of my 95 wrangler that I replaced the engine with a 89 2.5. I thought the leak may have been coming from the base of the dip stick tube. but after adding a new weld around base oil leak still continues. Not coming from head either I am totally confused by this. Did you find anything out?

Good info for XJs ...
http://www.naxja.org/forum/