AMC did have an optional 2.1 turbo diesel in the 85-86 vintage XJs. It was a rare option, and I've never seen one up close to examine the powertrain. There's at least one on old XJ diesel on YouTube, and it's the only one I've ever seen outside of a couple AMC press release photos.
As far as I remember, it's either a Renault or Pigeon sourced plant, pretty common in Europe. Never heard anything negative; I suspect getting parts would be a minor challenge. Like all IDI mechanical diesels of that era, they were relatively heavy, smoky, clattery, and fuel efficient. Output was like 90hp/150 lb ft torque 2800/1800 rpm (guess from memory).