Did a fairly big report last year on the k series for uni, and all it's associated problems. Sure it was revolutionary when it was released but I wouldn't look back at it as a great engine, they're just far too fragile. The head gasket problems have only just been fixed on production vehicles with some of the latest land rovers sporting multi layer steel gaskets that seem to stop most of the worries, a revision to the thermostat is also the main large change used by the few people that bother trying to make it reliable. In one way it's success was also it's downfall, the K series fared so well in all of rovers testing they decided to make revisions to the design to allow the capacity to be increased to 1800cc, which caused all the head gasket issues.
For the cost of reskimming the head etc i'd buy another one, and make some of that money back giving the current one to the scrapman, if he'll even take it.
The engine block is aluminium so must be worth a bit as coke cans
