Hey,
I have a very used '96 XR400, and a good friend of mine has a very new '97 400. Neither bike has ever missed a beat. The engines/oil run very hot, and I've given my 96's tranny a few good work outs, and never had any problems. I've read the review where they mention the tranny sucks, and they were riding on a MX track, and even admitted to giving the 400 a severe flogging.
The 96's and 97's were jetted very rich stock, 162 main, 62 pilot. My friends bike is stock except he has the airbox snorkel and muffler baffle removed. His starts great cold, but will flood out when hot if you kill it at speed. I've got an XR's Only pipe, UNI airfilter, and 160/60 jets (sea level elevation). Mine is harder to start cold, but never floods when hot if it's killed at speed. BOTH bikes, when at idle, will bog if you whack open the throttle very quickly. However, this only happens right off of idle, neither of us have yet to experience the "bog problem" while actually riding. Even when we are riding through very slow, technical stuff when you are lugging the motor.
There is ample power and torque on tap with stock gearing 15/45. From crawling over trees/stumps/rocks at 3 mph all the way to a top speed of about 85 mph. Just roll the throttle and hang on. For real tight and slow trails, I would recommend lower gearing, but you won't be disappointed with the stock gearing.
Suspension tuning per rider is a factor with any bike you ride, but XR's are not known for great suspension. I'm 6'0 190lbs., I played with the clickers a bit, and feel right at home on the stock XR suspension except on big roots that sneak up on you, and big air.
Maintenance is easy, use a good quality 4-stroke motor oil (NO automotive oils), and oil filter, and change them VERY often. Keep your air filter clean, and your intake/exhaust valves adjusted and you will be giving your bike to your great grandchildren.
Overall, I can, and do highly recommend XR400's for casual/aggressive intermediate skill riders who want a good, reliable bike, at a great price. Don't be scared by the 96-97 bug reports. Furthermore, don't be discouraged by the people who buy brand new YZF's/KTM's every year in these very forums. They are excellent performing bikes stock, but are very expensive, and in my opinion not nearly as reliable as my old, "out of date" XR.
As with any used bike, check the frame very carefully for any cracks, especially near the welds. Check the wheel and swingarm bearings by trying to rock the rear wheel side to side. There should be very little to no play. Also check the steering stem bearings by shaking the handlebars/front wheel. Check for leaky seals around the front forks and rear shock, also look for leaky gaskets around the top end of the cylinder.
Good luck with your purchase and have fun, and be safe. Wear helmet, gloves and boots at the very least. If you have any other questions, I check this forum all the time.