For the brief squeel noise, it sounds like the AC clutch going out. It happened on my '98, and I had it replaced. You can also search "AC clutch" to see how others have dealt with this issue.
Do a search on "low pressure switch". It's common problem on late model XJ's. What happens is that you evaporator is icing up, which is caused by a faulty low pressure switch. You get cool air initially, until the ice builds up and all you get is warmish air becauce the evaporator is covered over in ice.
Once the ice melts, your AC works fine until it ices up again..... Do you notice large amounts of water under the passenger side of your rig after it's been sitting a while, after running your AC? That's a big clue....
Ivan