A P0705 without any other transmission symptoms is likely the neutral safety switch, as others have mentioned. Here is a link to one of many articles going around that deal with restoring function, which is often successful.
As for your coolant level in the reservoir, has any cooling system work been done recently? What is the temperature of the coolant gauge in your dash running at? (should be 200-210). Know exactly where your coolant level is right now in the reservoir when hot and cold (it will vary), then watch it closely for changes.
Check oil level, condition and color of oil and look for a "milkshake" color/substance under the oil filler cap. If you see that, it's possible that you have coolant mixing with your oil.
For oil pressure, you have to look at the exact numbers. What are you seeing? The specs for oil pressure for the 4.0 are as follows. If you're in this range, you're fine.
*No less than 13 psi at hot idle
*Between 37-75 over 1600 rpms
99 Cherokee, 4.0 AW4, NP242
Past Jeeps: 49 Willys, 81 Scrambler, 88 Comanche Without "data", all you have is an opinion!
Another thing to consider would be a compression test to rule out cooling system pressurization due to combustion gases.
I don't own an XJ any longer, but I still think they are the best of all the Jeep products ever made. My XJ was my favorite vehicle in my 50+ years of driving.
So...I stick around and give advice.