Why the L series?
And will it tow?
As I have had an 1800 Kseries on loan from the dealer whilst my Range Rover is having its head re-built, and it wouldn't pull itself out of a paper bag!
Price : You're considering a £400 motor - so you're obviously not wanting to spend to much on this - the L Series are the older Freelanders - so are cheaper than TD4 in that respect - they also only come in basic trim - so once again are cheaper and less gadgetry to go wrong (you've got your RR for for for posh unless its a Classic).
Running Costs & Reliability : You should get around the 40 MPG mark from an L Series. I just did a 3,000km road trip around the mountains here in the South Island NZ with 5 adults and our luggage - averaged about 37/38 MPG - which isn't to shabby for the size of car, conditions and what it was hauling. The TD4 is similar. The L Series only comes in manual, the TD4 auto will cost you at least 20% more in fuel. The L Series is amazingly reliable, you'd be unlucky to get many problems with an L Series - there's very few reports of problems experienced on LZ, but there's always reports of TD4s running badly or the ECU won't let it drive over (say) 30 MPH. So they're less likely to give you problems and cost money. They do need cam belt changes though whereas the TD4 is chain driven. Just keep care of the aux belt tensioner - as there are reports of them throwing the aux belt which then takes the cam belt out.
Performance : To say the L Series is underpowered, I feel, is in correct. Its true (in standard spec) they will never win a drag race off the lights (in fact what ever you choose to race - you will lose!). For normal road use though, once they're moving, they're fine. So acceleration from standstill can be embarrassing, but mid range is fine - although a few more gear changes than 'your average road car' should be expected. As I say, it was more than fine lugging 5 people over mountain passes up to about 3,500ft.
Towing : I've towed all sorts of s**t with my L Series. The only load it struggled with eventually bust the axle on the commercial trailer I'd hired to shift it! When I towed my SIII 109 SSW home on a transporter - it went fine. When I load up with family, hook up the boat and load all our camping gear (we camp in style with a tent that weighs nearly 100KG and so much stuff its ridiculous) and head for the Kaikoura Ranges and Queen Charlotte Drive - it performs beautifully. We've had TDI and V8 Discos for 12 years before, which obviously have better towing ability, but I've never really missed them from a towing perspective (and for my use the Freelander's 4wd is better as well - but that's for another thread!). So I find the L Series is a great lump for towing. Freelander is lighter than RR or Disco, so ultimately its not going to tow very heavy loads with the safety that they will offer - but the L Series will shift weights that can get you into a lot of trouble! Its only available in manual - so if you are not an experienced tower and will be towing heavy loads - the auto TD4 may be more suitable - but if you are experienced, the manual should not limit you and ultimately will be safer and more rewarding to haul large loads.