When first realeased the Freelanders were available with 1.8L K Series petrol engines or 2.0L L Series diesel engines. In 2000 the diesel was changed to the BMW TD4 unit (due to emissions I believe) and the 2.5L KV6 petrol was introduced.
The L Series and TD4 are similar in many respects. I think the consensus is, in standard spec, the TD4 is a bit more refined and powerful while the L Series is a bit more economical and reliable.
I don't know if its just because there's a lot more of them out there - but there are quite lots of threads on here about faulty TD4s whilst hardly ever about L Series. The TD4 faults are often fuel pump related but can be anything from the multitude of sensors around the engine to snapped cranks. Having said that a couple months back 2 members had cambelts let go on their L Series with resultant grief. I'm sure though the L Series is more reliable and, as has been stated and I'm only just finding out, can be turned quite a lot
On the run you should get around 40MPG from either diesel - the TD4 just under, the L Series just over. Around town that figure will drop by up to 10MPG.
I love my L Series. I'm after a 2nd Freelander and am hanging out to find an L Series in need of a bit of TLC - they're hard to find here amongst the many K & KV6 series with HGF or cooked engines.