That worn part under the front is the
track bar, often called the
panhard bar. The entire bar will need to be replaced and your handling will greatly improve.
That's a clean sharp XJ.
As for the rust, it's very common in XJ's, especially the front floorboards and in the rear above the exhaust. You'd probably find a lot of metal that needs replaced if you go poking around. I've taken XJ tanks out in the past and I can't remember what they are attached to, but it's not the thin tub floor.