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I remember a thread a while back where there was much discussion over the differeces in the Disco Models. Here is a summary:

1994-98 Land Rover Discovery: Highlights

Land Rover expanded its sport-utility vehicle lineup in the spring of 1994, adding a new Discovery model to the existing Defender 90 and Range Rover. The new four-door wagon from the British Range Rover firm used a 182-horsepower 4.0-liter V8 engine. Permanently engaged 4-wheel drive was standard, with a 2-speed transfer case and either a 5-speed manual or optional 4-speed automatic transmission. In standard form, a Discovery seated five, but twin center-facing rear seats were optional. Standard equipment included dual airbags and antilock all-disc brakes.

Year-to-Year Changes
1995 Land Rover Discovery: Side impact beams were installed on both front and rear doors for 1995.
1996 Land Rover Discovery: For 1996, three models went on sale: SD, SE, and SE7, the latter with center-facing rear seats for 7-passenger capacity. The SD had a standard 5-speed manual transmission, with a new 4-speed automatic unit optional. A new 2-speed transfer case debuted during the 1996 model year; claimed to be quieter than its predecessor.

1997 Land Rover Discovery: All three models got a burled-walnut dashboard. The SE and SE7 also gained a wood-trimmed center console and gearshift handle.

1998 Land Rover Discovery: Only two trim levels were offered for '98: LE and LSE. Other changes were minimal. Though styling stayed the same, Discovery was redesigned for '99.

Taken from:
http://auto.consumerguide.com/Auto/Used/reviews/full/index.cfm/id/2190/act/usedcarreviewshowall/
 
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