It probably would have sold better if it offered AWD like the X-Type... I'd almost go as far to say it would have sold better if it was FWD. Put it in the market of the ES.
Unfortunately, I don't think the DEW-98 is readily adaptable to AWD, although Jaguar may have squeezed it in by now.
I was thinking about this on my way home today-while enjoying the driving experience that this platform still gives me. In 1998, it was by far and away the most advanced design in terms of suspension and drivetrain that any American maker had put forward, and I'd dare say that at least for the size class it may well have been the most advanced in the world. The IRS is phenomenal, and it was one of the first that made a serious effort in anti-dive suspension. After 12 years on the road, my car still amazes me at how flat it stays during hard braking.
Granted designs have progressed a lot in 18 years, and I'm not sure if any RWD passenger car DOESN'T have have IRS now. The newer RWD cars I've driven have superb road-hugging IRS, and most makers are working on anti-dive to varying extents(with some being near perfect and others doing really well). Granted now that it's only a Jaguar platform, they have(I think) continued to improve it and the XFs I've driven do certainly have a different feel from the S-types of driven and my trusty LS.
In any case, my general aversion to front wheel drive would kill any interest in the car for me