One of the biggest "hidden" damages to the engine would be if it had been "hydrolocked", but then they got it running again.
Hydrolock occurs if the exhaust manifolds/risers rust through and allow water to enter cylinder(s) through the exhaust valves. Water doesn't compress, so the engine will not crank (hence the term hydrolock). Removing the spark plugs, clearing the water, a lot of WD-40 and you could get the engine running again, but if this happened, then a valve job or complete rebuild might be necessary in the near future. A problem like this can sometimes be determined by a compression check.
Even short of a Hydrolock, rusty/leaky manifolds will cause engine damage, so you need to determine their condition, or just replace them right away if you don't know how old they are. I just replaced mine for $600 + shipping as detailed in this thread:
http://www.smwebhead.com/phpBB3/viewtopic.php?f=11&t=12059+1 to Ric's comments about having a survey done at your expense. If they will not allow a licensed surveyor to do a survey, then run away!
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"Knot Easy" 2000 Horizon 240 Volvo 5.7GS /SX
tow: 2017 Honda PILOT EXL-AWD
prev. boats:
'87 Chaparral 198CXL 4.3 OMC Cobra
'69 Jetstar 16ft Ski Boat, 115hp Yamaha
'68 Aluminum Jon Boat, 3hp Sears
'64 Water Wings