My '99 XK8 convertible is my dream car, after 40 years of Jags, BMWs, Mercedes, etc. The key to happy motoring with these cars is 1) inform yourself about the issues, mainly the 4.0 liter's needs re upgraded timing chains, tensioners & water pump, and 2) have a local Jaguar specialist (not dealer) who can bring them up to standard & maintain them there. My XK8 cost me $5800 in 2015 with perfect body & interior, no accidents and with the engine upgrades already done & convertible top hydraulic lines replaced. After new tires, shocks, motor mounts, front brakes, mass airflow meter, valve cover gaskets, plugs & filters, she now runs & drives like new for a total all-in price of $11k. I couldn't be happier.
UPDATE: 15 months into ownership of my '99, I've spent very little on the car except for oil & gas. Classic/specialty auto insurance (Hagerty) has reduced the cost of comprehensive insurance to less than $400 annually on an agreed value of $15k. Costs since the initial review have been limited to a new Jaguar ignition coil ($128) & professionally repainting the front & rear bumpers (approx. $600), a project I intended since purchase. There have been no other costs; everything works great on the car & it runs & drives beautifully.
I still marvel at how much car you get with the XK8, compared with much more expensive grand tourers like the Aston Martin DB7 and Porsche 911. It took nearly 20 years for the XK8's predecessor, the XJS, to begin to appreciate in value, so you can reasonably expect XK8 values to start climbing in a few more years. In the meantime, buy the best accident-free XK8 you can afford, have a local Jaguar specialist maintain/service it, and just take care of it like you should. Great value, great motoring, great experience.
UPDATE: It's been close to 2 years now since buying my '99 XK8, and I'm happy to report that she continues to be a pleasure to own & drive. No horror stories, no unexpected maintenance, just a sweet gorgeous Jag. I've owned a lot of cars over 40+ years of driving; this one is the keeper of the bunch.
After 80,000 miles, the timing chains came off. The engine was destroyed. And the warranty had expired. Jaguar must have known about this issue -- the issue has been widely written about by other owners on the internet and my dealership stated that chains typically come loose between 80,000 and 100,000 (but a small oil leak usually leads to a repair before all timing chains come off). But no one warned me. Not Jaguar, and not my dealership. Don't be a fool. Don't buy junk.