You got it off kijiji where you went to meet the guy, look at it, Inspected it with eyes closed, decided to buy it, agreed on a price and paid him. Done deal. If you knew or discovered the problems then you should have refused to buy it, or fix it and not bothered the seller about it, cause it really is your fault not his. Ever heard of buyer beware (caveate emptor)?
If you got it off ebay then it's a different story. Seller can over exaggerate it's function and condition.
I've bought a Diawa reel off of kijiji, seller said the bail won't close b/c of lost spring and cover, plain and simple. I went, looked at it and for $10 knew I could fix it and did. After making a return spring and a bail cam it works fine, I just did not make a replacement cover for it yet. You probably saw me using it on Mike's boat on Rice.
Being a frugler is not just buy the cheapest crap around only b/c it's cheap. You still have to know what you're getting yourself into. You're lucky seller is giving your money back, I think that's very decent of him to when he's really not obligated to.