If a 0331 head is being used, it has to be using coil packs instead of a distributor as well. 99s use a distributor and a 0630 head.
There are two 4wd transfer cases an XJ can have, and either one can be shifted to 4hi up to 55 mph just fine. To shift into 4lo, you must be stopped and in neutral. One transfer case is the 242--it has 2wd, full-time 4, 4hi, N, and 4lo. The full-time 4 can be used on dry pavement. The 231 only has 2wd, 4hi, N, and 4lo. Never use part-time 4wd on dry pavement.
XJs make a lot of sounds--they're not the most quiet vehicles--but you'll know an important sound if you hear it: loud rattles, knocking, or grinding (this is in regards to the whole vehicle--not just the xfer case), and we can always be reached here if you have questions about something you hear
If/when you buy one, regardless of what the seller tells you, just change every fluid in the whole Jeep including a coolant flush. So many people neglect their vehicles, and starting fresh with your maintenance will really bring some great peace of mind. I recommend just doing a pan drop and filter change instead of a flush on the transmission--safer for the tranny; it won't change all the fluid, but it will change a lot of it, and afterwards you can just do a few periodic drain-and-fills much like an engine oil change in order to freshen the fluid up a bit more.
These things can go for a LONG time. Hitting 300k miles or more isn't uncommon. If you want to keep it long-term, try to get rust repaired because it can and will get out of control if you just leave it be.