Biggest problems I had with xenonauts 1:
Difficult to figure out line of sight to see if you had a clear shot before you moved. It all felt so unintuitive, I'd have my shot blocked by the corner of a car that should be trivial to shoot over, or once I had a shot curve at virtually a 90 degree angle to hit my tank with friendly fire because the game decided it was somehow blocking my line of sight. I even once had an alien shooting at me around a corner that I had a 0% chance to hit back, that should never happen, you should always have at least a small percent chance to shoot him if he can shoot you.
Poor weapon balance. Percent based TU costs for weapons completely ruined the lmg and sniper rifle and made the shotgun (and to a lesser degree pistol) godlike. With high rank soldiers I could either take one sniper shot, or run across 25% of the map, take two point-blank shotgun shots, then still have the TU to duck back into nearby cover.
Enemy psionics were pure and utter BS. No defense (bravery did virtually nothing), no counterplay, no strategy, nothing.... just constantly getting slammed every turn and hoping RNG favors you. I kept expecting to be able to research some kind of tinfoil psi defense hat or armor or something but nope, nothing.
If they can fix those problems it should probably turn out to be a pretty decent game.
Edit: I'm a little sad to see they are redesigning the air game to be completely different. I hated it at first, but after a while it grew on me and I thought it was kind of fun.