TD saloons are very cheap, estates less so. I would counsel that a 1.9TD 406 is a fair bit slower than a 405 with the same engine (I've owned both!), being much heavier. More refined and interior is better-built on the newer car, although I find the seats not as comfortable.
Anyway, main things to look for on a TD 405:
- Rust at the bottom of the inner wheelarches where they meet the floor, behind the front suspension struts; either end of the sills; behind the headlights on the horizontal inner wing panels; in the boot, specifically around the rear shock absorber mountings. Be wary that a 405, like any other Citroen/Peugeot product of it's age, doesn't tend to show rust on the upper bodywork - but check around the sunroof (if fitted), windscreen seal and insides of the front door frames, where they meet the inner rubber seal next to the screen pillar.
- Mechanically, the critical thing with the 1.9TD is to check that the head gasket hasn't gone, and/or the cylinder head isn't cracked. Best ways to check are:
1) see if there's proof of change of coolant every 2 years (regular coolant changes on this engine are critical to long life) - I'd also check the date stamped on top of the radiator too. If its more than 10yrs ago, it will be past it's best;
2) the heater puts out good heat on the hottest setting (it should feel like your face is melting if it's a goodun!

);
3) the temp gauge should rise to 90 after about 5-10min driving, drop to 80 (thermostat opening) and then stay there. Watch carefully to see if it rises when accelerating hard;
4) after testdrive, wait 30-45min then open the radiator cap. There should only be a small "gush" of released pressure, and no spurting of water. Look at the colour of the coolant too, if it's high enough - cappucino-type stuff is bad news.
Make sure it starts OK hot and cold, without too much cranking. White smoke/rough running on a cold start is only acceptable if it lasts for less than a couple of seconds. Otherwise, suspect air in the fuel system, glowplugs, or a dying fuel pump.
There should be a decent shove of acceleration between 2000-4000rpm. There should be a faint turbo whistle only; if you can really hear it, it may just be an air leak, but it may also be a worn turbo from lack of regular oil changes.
It should stop, steer and ride really well. Check all electrical toys. The usual used car checks then apply
Oh, and go for a Phase 2 model, much better built - easiest way to tell is that the radio aerial should be on the roof, and the heater controls are sliders, rather than rotary knobs. Phase 1 cars had a 1769cc turbo engine, rather than 1905cc, too.
£500 should buy you a superb Ph2 TD saloon. Buy on condition and service history rather than age and specification, and you'll be fine. My GLDT is a belter - but unfortunately not for sale!