Engine and Transmission Tech

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From the research I have done in the past across many threads on many forums there are two main reasons for water leaks around liners, firstly what could be termed age related, where the block has, for one reason or another, usually not enough anti freeze or poor semi dry storage then reuse of the engine the block has become filled with crud and hot spots have developed that have cracked the block at the deck. Often to a bolt hole and the liner has become loose, this happens in older engines, 100k plus miles, usually 3.9s. there appear also to be some cases where the QC was so bad that engines went out the door with the liners not properly seated, these ones seem to be on the first of the 4.2s in RR classic long wheel base (I have found 2 4.2s like this on forums in the past and considering they did not make very many......). I will say the QC related problems seem to be related 3.9s and 4.2s and this is what kills these blocks.
The cracking behind the liner resulting in the liner dropping problem, from what I have found seems to me to be a fault related almost entirley to the 4.0/4.6 block. In this case I think after the very poor reputation of the 4.2 for reliability (the nose falling off the crank, warped heads and snapping rods) I think the QC problems were mostly sorted. I also think the new/ refurbished production line for the new block meant the liners were being seated properlyin the first place so the later problem was being seen first. This was the time rover had been sold, that is where the money came for the 4.6/4.0 blocks and the new owners were trying to sell off landrover to get back some of the investment money.
I have seen posts with problems relating to the more unusual blocks like the 3.5 cross bolt and the cross bolted 3.9 intermediate blocks, but I think these relate to use in that the owners were pushng the outputs to points where the rover is just not strong enough to hold together.
Generally the middle run 3.5 block seems to be liner problem free, they were made before the issues of QC andthe early 3.9s with the extra webbing were pretty good it was on the 3.9/4.2 blocks where the casting/machining lines were old and worn out, that liner/QC problems started remember the 3.9s were from the time the government were trying to sell off Rover to the lowest bidder and did not want to spend any money on it and rover had spent a load of money on the iceberg engine that never made it to production and so they used up all the bits from that project into RR production engines, and dumped a load of the bits on TVR.
Also the later 3.5 blocks were strengthened for the Range rover but were only expected to make about 140 bhp so the stresses on them were much less and had non overdrive autos with non lock up converters, or ran low geared 4 speed manuals, though some had O/D units fitted they did end up with a very pedestrian shift that did not lend itself to giving the engine a good thrashing! I think here as you imply with the 3.5 the issue is old age of the blocks and lack of maintenance/anti freeze causing block problems.
Avoid the very early P5/P6 and the 101fc and stage 1 v8 blocks they are very week around the valley area and had a reputation of falling in half down the middle if stuck in a heavy vehicle/ tuned and revved, these were still the old stock that came over from Buick when rover bought the design and date from '61/'62 and were very exotic casting technology for GM at the time!

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