I wouldn't call it the pick of the litter, but for $500, you did good! You're not missing much with the LSD, by '03 Nissan had dumbed them down so far that they have less breakaway torque than what the lug nuts take. The first couple years of Xterra had better LSDs that I'm told will bolt right in, provided you match the gear ratios (or take the opportunity to swap both diffs to the 4.6 ratio if you're planning to run larger tires). The LSDs can also be rebuilt to higher specs if you're willing to tear the rear end all to bits. If you're not in a hurry to lift it, these guys are working on a subframe drop kit, though they're not cranking them out yet. The electronic transfer case is too complicated for my tastes and requires special care if you run manual hubs (like Kiwi said), but they seem to hold up alright, and they actually have a lower low-range ratio than the standard box (2.596 vs 2.020).
My dad had an '03. It was comfortable, had plenty of power, and handled well, but the electronic throttle body was a bit laggy and the engine burned a ton of oil (not an uncommon problem on early VQs). It smoked like hell on warm starts, otherwise you'd have no idea it was burning oil until it ran out, so keep an eye on the dipstick. Hopefully yours is in better shape. If you've got the auto trans, you should pull the intake apart and Loctite the power valve screws as well, they tend to back out and fall in.
Before you start throwing mods at it, take it out, see what it's got, see if you like it. If you do, see what it struggles with and start upgrading there. There's lots of good info here and some nicely built-up rigs to get ideas from.