I would also lean towards taking the fabric off the fuselage and redoing it. Drips and runs are almost impossible to correct and tend to show through the finished job. While the fabric is off you should go through everything. Like others said there could be poor workmanship, corrosion, etc. That was the case on my model 5 Outback, I found several things that needed to be redone on mine including misaligned control pivots, tight rudder pedals, corrosion, too tight bolts, etc. IMO I would offer a little less than 20K due to the damage and unknowns.

Are you going to be happy with the 1400# gross weight? If you go with a Rotax it shouldn't be a problem. I have a 1550 GW Model 5 with a Continental IO-240 and have a UL of 657# and ~500# with full fuel. I wouldn't be happy with a ~500# UL, which leaves only ~350# with full fuel.

FYI you can download a free copy of the Poly Fiber manual. I believe it is on their website.

The factory should be able to supply almost everything on the model 5. Get the larger elevator.

If you get the plane there are plenty of us that have built the Model 5. I have a complete manual and would be happy to give you copies of any pages you need.

It's a good idea to get a statement from the seller. Other than that you will need to document all of your work using photos, dates/signatures in the build manual, etc.