Ive not seen a running M5 lump for under £10K that doesn't need a rebuild, at least the jag has iron cylinder liners not Nicosil 
. A T56 conversion is quite common on XKs and the ECU/Throttle can be reprogrammed to cope with the manual box as part of the conversion, personally I would stick with the auto, the 5 speed is loverly and the newer 6 speed ones are meant to be even nicer, in sport mode or using the J gate it beats a manual hands down! 
Best regards
Mike
