I would see what you can find in a used engine. Also, look around to see what similar vehicles go for in the area. Also, find out if he added oil, and if so, how much. I don't know how low it has to be to trigger the light, but if we are talking 1 quart, it'* not the end of the world, or at least likely not the cause of the issue.
Also, I would have reservations putting anything beyond $1000 in to the vehicle, assuming the rest of the car is in tip top shape. It may very well just be a case of go till it blows. I believe thicker oils may buy some time too, but not much in the grand scheme of things.