I have a 1.8 GS 2001 model Freelander (we also have a 3.9l Discovery as well as a 200TDi my son is doing up)
I would not recommend the 1.8 for towing - the TD4 is a far better bet. The 1.8 is fine as it goes but it lacks the grunt needed for towing.
The problems with the head gasket are well known on the 1.8 and are easily prevented. In the main it is the pre 2000 model year that had the problem. The thermostat was put on the backside of the engine rather than on the top hose end. Result is that cool water entering the engine shuts the thermostat and the water in the block stops flowing = cooked engine = head warp.
From 2001 model year on the thermostat is remotely sited so the problem is usually found on later models. Regular servicing on this engine is a must.
Stick a remote thermostat in the top hose and take out the stupidly sited original and the problem goes away. Stronger head gaskets are also available to add to the security.
I use ours regularly and find it nippy, chuckable (Four wheel drive is GREAT FUN in a Freelander) and a real long distance cruiser. Good economy as well.
The Traction Control is truly excellent in slippery conditions. And the Hill Descent Control is awesome. So VERY different to the Discovery's but really good. But use it too much in muddy conditions and you will go thro' discs and break pads at a rate of knots!
So clever tho - the way it progressively cuts in more when you steer into the corner when descending steeply.
If you can get one of the last Freelander TD4's from the Lode Lane factory it should hold its value well as the new Freelander is made elsewhere.
The TD4 is a great engine for towing and being a BMW unit is not likely to suffer the stigma that the 1.8 suffers from - i.e. coming from a failed manufacturer.