hi
with my limited mk1 knowledge (i am picking mine up tomorrow) I'd say that you have some relatively easy fixes, that is of course presuming that nothing else is wrong with it
the paintwork can be cut and polished and made to look good so no worries there... it will take work or paying a detailer but it will be worth it
you can have a look at this cabby buying guide for details
http://www.vwgolfmk1.info/main/Buyingacab.pdf£500 doesn't sound like a bad price for the age and mileage.. but for that price you are never going to get a minter and you will have to pay money out to get it into anything like good shape... maybe not another £500 though
the scuttle panel (under the windscreen) can block up with leaves and debris, there is a little tube under there which can clog easily... easy enough to clean out though. suggest getting the seller to pour a watering can full of water over the seals to check for leaks.
if its been standing for a long time check the quality of the tyres
i am sure the others will be along shortly to give more insights
