Stay away from any XJ's over $3K and look for any XJ's under $3K!!!!!!...............................................Sorry, I couldn't resist.
Basically, the usual........look for rust anywhere, signs of abuse, etc. The XJ was a well built vehicle - it's a shame they quit makin' it. From what I've seen, I'm sure you can find a decent deal in your price range. The key word is "patience".