Lots of options.....does your friend have any money? He can glob together a bunch of mis-matched parts and do a budget lift on the cheap and deal with the choppy ride and replace stuff as he goes or get some good parts that will last and provide the best combo of street ride and trail flex. The XJ is a pretty capable rig out of the box, doesn't take much to make it 4+ trail worthy.
If you have a NVG231 t-case it will hold up regular trail use, but not lots of skinny pedal abuse. I wheeled a 100,000 mile 89 XJ with a 231 T-case for 10 years, slapped a new chain in for grins when I did the Currie SYE at about 150K mi. and it was trouble-free when I sold it with 203,000 miles on it.
I've tried lots of lift combo stuff over the years, but RE makes one of the best all-around packages for the buck. If you want to lift it once and be happy with your dual-purpose rig, go with the TNT kit. You'll get the sweet street ride that long arms provide without the negative ground clearance issues that the RE, Clayton, Full Travel, etc long arm setups have. ( I personally like the TNT arm kit, RE coils, Deaver leaf pack, Bilstien shock setup...but it's gonna be more $$)
Oh, install rocker sliders BEFORE you bash them in.
Don't lift it more than you need to run 33's, 6" is plenty and with some mild trimming, 35's can be made to fit......but 33's are plenty and will keep your D30 happier too. 2000's have a low-pinion D30 which is poo, but a pre-98 HP 30 could easily be swapped in before you re-gear......speaking of regear, don't waste your money on 4:11's, no less than 4:56's with 33's and consider 4:88's.
For XJ related Tech, the is no better place to gain an education than
www.NAXJA.org membership helps support the Blue Ribbon Coalition, USA-ALL and we're members of U4WDA and U4 too.
Good luck and hope to see you on the trail.....