I'd def. get more pics or go look at it. Remember, it is an older k5, so you should know you'll get someone elses problems, even if they are small. And rust just depends on what part of the country the vehicle is coming from. My k5 came from inland SC so it has zero rust on it. For the transfer case problem, i suspect linkage, as someone else already noted. Even if the transmission is toasted, its a th350, you can get them anywhere. Dont be afraid of a little transmission work, find someone who works on them and give them a hand with labor and pay for parts. Im sure since your looking at an older k5 that you're mechanically inclined anyway. I wouldnt pay more than about 2K for the truck though, but i've seen k5s in far worse shape. Good luck