AWD was, in fact, and option for the XLTs with the 5.0. I think '98-'01 is the sweet spot for a 2nd gen Explorer. The 5.0s from that year range have the desirable GT40p heads and I find the rear hatch of the '98+ much more appealing than the rear hatch of the previous years. In '99, the front got a facelift with a new style bumper, but removing the plastic air dam from the '98 style bumper allows for a better approach angle than that of the '99+ style if you're into offroading.
Things to look for:
-Check all of the obvious things (fluid levels, leaking fluids, noises, etc)
-Listen for exhaust leaks around the manifolds (this is common)
-Check the CV joint of the front driveshaft to ensure there are no tears in the rubber boot
-Check the CV shafts of the front axle to ensure there are no tears in the rubber boots
-Test drive and listen for binding or a metal-to-metal sound that could indicate the chain in the AWD t-case is stretched or broken
-If you park on an incline, watch to see if the vehicle rolls while in park... if it does, this is an indication that either the transfer case may be bad or the front driveshaft itself is missing, but you would notice that when looking under the vehicle, lol.
-Ensure all of the tires are the same size with about the same tread depth (AWD transfer case is very sensitive)
-Check the A/C and heat to ensure the blend door properly functions (expensive and/or time consuming to fix this the "right" way, but there is another route you can take)
-Check the power lock switch on the driver's door to ensure it locks and unlocks (if it doesn't, this is an easy fix... a wire commonly breaks)
-Check the driver's door lock to see if it functions smoothly (I've had 3 Explorers and all three had worn out actuators)
-Check the rear wiper (two common things are the motor dying and the wiper arm not touching all of the glass... the latter can be fixed for free)
-Check the radio display to see if it lights up
Many of those things are trivial, but they seem to be some of the most frequent things that go bad. I'm sure others will chime in with things I have forgotton.