I did this conversion to my Series III in 2005. I bought the engine complete with a Phillips-Milner adapter (This is a replacement flywheel housing) and with special engine mounts bolted to the block, for £150. The kit also came with an offside engine mount to be welded to the chassis. To do the conversion you need to make several alterations, these include: cutting and boxing the bulkhead (offside footwell to clear starter motor, centre of the bulkhead to clear the adaptor, nearside footwell to clear the exhaust manifold); The battery either has to be relocated or the battery tray must be modified so that it's removable, (that's what I did) in order to fit the engine and have access to the alternator; The exhaust downpipe has to be modified; The sump drain plug needs to be relocated; You will need an electric fan. When I bought the engine it was fitted in a Land Rover and no bulkhead modifications had been made, but the engine was fouling the bulkhead. It is annoying that the engine almost fits in with no bulkhead mods, but to do the conversion properly you will have to chop the bulkhead about.
After fitting this engine I had a very carefull look at the installation and realised that the front differential would hit the engine when the front suspension was fully compressed. The point of contact would have been the big aluminium casting that is bolted to the front of the block. I trimmed a bit off this casting and all was well. I also noticed that on full suspension compression the front propshaft would hit the flywheel housing, so a bit had to be trimmed off that too.
I have done about 6000 miles since the conversion and have done about 20 greenlaning trips with it. The engine does not go quite as well as a 2 1/4 petrol, but it will get up to just short of 80 mph (7.50 x 16 tyres, no overdrive) on the flat. The mpg is about 30. All in all I am very pleased with the conversion, but I would not do it again. So many modifications are needed to get it to fit and I do worry about the timing belt snapping when wading through deep water, as the timing case is not and cannot be sealed. Having said that I, have done a river crossing, on the Strata Florida lane, with water coming over the bonnet, without any problems. Another problem that should be solved is that Flywheel housing is not sealed, this could be done but would need some ingenuity. I can't help thinking that a Land Rover 2.5 N/A diesel is the best diesel engine for a series LR - It is designed for offroading i.e. sealed timing case and flywheel housing and it bolts straight onto the gearbox. I believe that the Series III manifolds will bolt onto the head so you can use a standard downpipe and oil bath filter and pipework. Another significant problem is that the Transit engine is ear splittingly noisy. I drove it for quite a while with no soundproofing, but if you don't want to damage your hearing or wear ear plugs then you need some sort of sound proofing.
In conclusion I would say that if you don't intend to drive the vehicle into deep muddy water, you really love Transit engines, you can weld and are prepared to tinker around making everything work, then fit a Transit engine. If want to do the cheapest and least time consuming engine conversion, don't mind having a slightly less efficient engine, want a really tidy installation, then sell your Transit engine and get a 2.5 N/A Land Rover engine.
Beware - The transit engine will not fit a series IIA gearbox bellhousing as the clutch slave cylinder will foul the starter motor. This is probably the case for Series I and II bellhousings too.