Looks like it's been retrofitted with a 300tdi from a discovery. That's a 300tdi, not a 200tdi, and it looks like a 300tdi disco air box. A 300tdi air filter is tubular in shape and sits on the fuel pump side of the engine. Your mechanic is either going off age-related info or never looked under the bonnet.

200TDI and 300TDI Temp Sender Conversion kits. We at Steve Parkers have developed 200Tdi and 300Tdi Temp Sender Conversion kits. This kit is design to fit Land Rover Series 3 with the smith temperature gauge it fits in the lower half of your engine sump so that you are able to read your oil temperature. This can be used on both conversions.

Engine Land Rover 300Tdi. Used on: Land Rover Defender, Land Rover Range Rover. The company produced the 2.5-liter Land Rover 300Tdi diesel engine from 1994 to 2006 and put it on its most popular Defender, Discovery and Range Rover Classic SUVs. The engine replaced the 200Tdi.

I would check it is the turbo and not the stem seals. If it is the stems, then have the head reconned and then refit it, leaving the rest of the engine well enough alone. A standard 300tdi in either auto or manual form is fine for pretty much anything. As said the engine is on 80k, as it had a recon engine at 120k.
Land Rover Discovery Tdi (1998) For Sale. For sale is this increasingly rare 2-door Land Rover Discovery 300 TDI, which was first registered on the 26th of June 1998. The car is registered as a utility vehicle and it has been regularly used throughout its life, covering 168, 834 miles from new, by its 6 previous owners. Discovery 3 and Range Rover sport transfer boxes. 300 TDI Remanufactured complete engines, 12 month / 100 000km warranty on exchange. Re-manufactured Combo units consist of sub assembly, cylinder head, loose gaskets, water pump, oil pump, sump & oil seals. Discovery 2 4.0L V8 engine 184 000km on exchange. uWFb. 521 639 584 335 503 676 543 255

land rover discovery 300tdi engine