He says the engine came this way to him in a trade and he actually took the guys word for it.
He has since made a partial refund to my paypal account tonight of $40, which I appreciate his efforts even if it is less than what I asked. I have a little bit too much in small parts cost, but the effort of him working with me is acceptable.
I believe he'll do well from here on out if he remembers to check engines before selling them.