As stated, the IRD serves 2 functions, as the front diff and a PTO to the rear axle. There is no center diff between front and rear axles, so if the prop was 1 solid piece the car would suffer wind-up - like driving a switchable 4WD constantly in 4WD or a permanent 4WD with center diff always locked. The prop though is split and separated by a Viscous Coupling Unit (VCU). The does not put up much resistance to small changes in speed between front and rear axles - so you do not get the wind up associated with cornering etc. On paper only the front wheels are therefore driven as the rears have this "sloppy" VCU limiting drive to them - the VCU kicks in (sort of locks up) if differences in axle speeds rise above normal expected speed differences - ie the front wheels have lost traction.
However, over time the VCUs tighten up and - this puts excessive strain (wind-up) on the transmission and something breaks. The weakest point is usually the IRD and it is this which goes, sometimes its the rear diff. Both suffer wear - its just a case of which "goes" first.
If the car has been run on mismatched tyres, this leads to axles running at different speeds (outside of those expected), so the VCU kicks in - once again causing wind-up.
Once this has happened is usually the time props get removed and the car is converted to 2WD. Sometimes the props are removed just because one of its carrier bearings got noisy, which is fine, just replace the carrier bearing - which you will have to get anyway because you don't have the props. Sometimes people may sense the VCU tightening and the props are removed before any great damage is done. However, you should work on the basis that damage has been done!
Buying a 2nd hand IRD is dodgy - you don't know its history and its likely to be no better than the 1 on your car. Rear diffs are a more reliable bet 2nd hand. A recon IRD is about £650 I believe. You can recondition an IRD at home if you are good at pulling and pushing bearings - a kit can be bought for about £150 with seals etc. However, you should remove the rear pinion first to check the condition of the crown and pinion gears driving the prop shafts. If the teeth are damaged - then you may as well just get a recon unit as the gears are expensive. If the IRD has had the rear pinion removed and a blanking plate installed, then the recon units go up in price as they are on an exchange basis.
When buying a Freelander - you should always budget on a recon VCU anyway - so this is no different if the props are missing!
You've been talking about bolting on all sorts of 4WD accessories to a Freelander purchase - that really is running. The walking bit is understanding how the Freelander transmission works.
It sounds a bit "naff" that the rear end is "sloppy" only kicking in when the front wheels spin. The reality is quite different. Having owned a couple of D1s before my Freelander, the VCU operates like an automatic center diff lock. However, unlike the D1 where you have to faff around with the transfer box leaver, the VCU kicks in immediately - you do not notice any loss of traction. I was super impressed with its capabilities - but didn't understand how it worked and it all went tits up with a big BANG one day as my IRD shagged itself