I second the diesel stop recommendation. Go over there and lurk in the 7.3L forums and you will learn a lot. I own a 2000 F250 with some mods. My answer to your question is, it depends on what you want to do with it. If you are planning some big power mods, then actually a 2000 model would be ideal. After the 2000 model year, Navistar stopped using, with only rare exceptions, forged rods. Conventional wisdom is that a forged rod PSD can hold 500HP (rear wheels) reliably. If you go with a 2001 through 2003 model, you will have PMR rods, considered reliable to 400HP. Big power will require a transmission upgrade, sooner or later.
If big power mods are not on your menu, then you will be happy with any of the models and if axles are important to you, the 2001 and up models used a Dana 60 up front instead of the dana 50. All models have the visteon-manufactured Sterling 10.5 in the back from the 2000 model up (talking F250's here). The 10.5 is roughly equivalent to a 14FF in strength. Look for a tag on the rear axle that says something like 3L73. The L will tell you it has the limited-slip option. Other good options to look for are rigs with the snowplow package, sporting "X" code springs that are heavier-duty up front and also the camper packages, which gets you 7-lead trailer wiring, overload springs and a rear anti-sway bar.
Your transfer case on the 4x4 varieties will either be the NVG 271 (manual) or the NVG 273 (ESOF--electronic shift on the fly). Internally, the units are equivalent except for the electric shift fork of the 273. With ESOF, you have a knob on the dash to actuate the transfer case and, by vacuum operation, auto-lock the front hubs. Most headaches with the ESOF come with vacuum leaks leading to failure of the auto hub lock (you then have get out and turn them old-school). Most guys who really off-road just cap the lines and swap in some warns or mile markers. The 271 and 273 are stout transfer cases, rated for something like 8,000 (that's not a typo) lb-ft of torque. The 271 is probably most loved, because most guys like us like the simplicity and reliabilty of a handle on the floor.
Sounds like you are going to use it for a tow rig. The auto, 4R100 tranny is not much loved, but its reliability issues, when they happen, are very commonly related to excessive operating temperatures. No matter what year model you go with, get yourself some real guages, including EGT, tranny temp and another of your choice, like boost or oil pressure. If you are looking at dealer used lots, have the salesman run and show you an OASIS report on the truck to make sure any recall or TSB services have been done. For example a few of the early 2000 builds needed an upgraded tranny cooler. Another example, there is a TSB out on putting isolators in the front springs to quiet annoying squeaks.
Known issues include CPS (cam position sensor) failures (an $80 part available from IH that you can change in 10 minutes with one wrench), glow plug relay failures (same deal, easy to swap/fix) and heat-related transmission torque-convertor failures. Other annoyances known for the model are leaks from the turbo pedestal (not affecting function, but giving an annoying oil drip from the back of the engine), and the cost of replacing the front axle unit bearings when they go out. Non-greasable ball joints from the factory are also not loved, but Moog greasable units are available aftermarket.
I would personally avoid models earlier than the "99.5" (october 99 and later builds). They had a more restrictive airbox, a different turbo mount and lower pressure high pressure oil pump.
With proper maintenance, a service life of 300k is reasonable.
I do plan on towing the K5 with it when I get one. Just have to get my Dad to build me a trailer
I will probably get a lot of crap towing a Chevy with a Ford
