Clunking sound is probably u joints, go underneath and wiggle your driveshaft. U joints are cheap and a good idea to replace (with greaseable ones) even if they're not completely shot. Not really familiar with the HVAC system in the xj so I can't help you with the smell. Welcome to the forum I'm pretty new here too
Yes to the musty/moldy smell, makes sense. Truck was used very little in the last 5 years. Will do the u-joints as well as rebuild the axles, believe I have a Dana 35, any special rebuild kit I need?
Thanks for the reply.