This is all caused by a design fault from JLR. They installed plastic capping over the inner wing, outer quarter panel lip, from the rear mudguards up to the point adjacent to the door on the rear quarter. Not extending that all the way round. Therefore the lip, became the rust trap. Mine started off just like yours, but you have to be brave enough to be brutal with it. As someone says cut it all the way back to clean metal. Fabricate a plate, & stitch it in. Grinding back the weld seams after. Liberally apply Jenolite to and surface rust areas & wait for it to change colour. Liberally apply Buzzweld Rust Encapsulator, leave to dry.
I then used Buzzweld War as a final coat.
Afterwards, you can either, use a strip of Freelander 1, wheel arch lip protector, and cut to size, or apply more war. I used war and lanoguard.
Jobs a goodun

Benjerbustmills my arch was not too bad, the hole I had was caused by water that was inside the sill by the jackpoint. I have seen the mode to put the strip along the front edge of the Sill and I have bought some from Duckworths. L322 2007 TDV8 3.6

Whats the standard cost of sill replacement at an indie. This is beyond my skills I think and the car has just failed its MOT due to rust issues.

I am wondering if I am better off throwing in the towel and changing her...

Very rarely a standard cost for welding work, if it's a small hole then it's worth doing, anything larger that has spread a lot and it won't be so cost effective... Pete

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2014 L405 Autobiography SDV8 4.4 Loire Blue Ebony interior
2011 L322 Vogue SE 4.4 TDV8 Baltic Blue. Parchment over Navy Interior. Sold
2012 L322 Autobiography 5.0 Supercharged Ipanema Sand, Jet Interior. Sold
2002 L322 Vogue 4.4 V8 Epson Green, Ivory over Aspen Interior (Fatty Offroader) Sold
-Click for Project Fatty off roader-

MOT says structural issues with suspension due to corrosion...

Ask the garage to be more specific, it maybe the subframes... Pete

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2014 L405 Autobiography SDV8 4.4 Loire Blue Ebony interior
2011 L322 Vogue SE 4.4 TDV8 Baltic Blue. Parchment over Navy Interior. Sold
2012 L322 Autobiography 5.0 Supercharged Ipanema Sand, Jet Interior. Sold
2002 L322 Vogue 4.4 V8 Epson Green, Ivory over Aspen Interior (Fatty Offroader) Sold
-Click for Project Fatty off roader-

The garage have declared the car, beyond economic repair... but have offered me a Disco 3 as replacement. Anyone have any advice?

Get a second opinion, from someone who can look at it, not from a forum.....  Pete

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2014 L405 Autobiography SDV8 4.4 Loire Blue Ebony interior
2011 L322 Vogue SE 4.4 TDV8 Baltic Blue. Parchment over Navy Interior. Sold
2012 L322 Autobiography 5.0 Supercharged Ipanema Sand, Jet Interior. Sold
2002 L322 Vogue 4.4 V8 Epson Green, Ivory over Aspen Interior (Fatty Offroader) Sold
-Click for Project Fatty off roader-

I agree with Haylands on this one, take it somewhere else and see what they say 2011 TDV8 Vogue SE

I am doing my arches and sills at the moment. It's a horrible job and as the replacement panels are not readily available there is alot of fabrication or trying to find rust free used parts. There are now outer wheel arch repair panels available but if your body has rusted through the liklyhood is that the inner wing and sill has gone as well and these panels are not available as repair panels.