Purchasing a car from a private seller. Nightmare.

Just follow through with Bob and see what he does for you. From original post, the guy is no stranger to fixing old cars. He has a shop with lifts. I seriously doubt that car passed through his hands without somebody checking it out and deciding NOT to fix it. BUT, it does look really nice, so might have just got a quick runthrough and missed it. Now that he got called out on it he may even go beyond what is required to protect his reputation. Just like I said on the title - go through the process and see what happens. Stay on it if anything goes awry, but don't sweat it till there is actually a problem.