Being as i was in this boat last year i'll throw my 2 cents in!
I couldnt afford new and with my string of "good" luck :p deceided to rebuild a bike given to me. Yep an 86' YZ250 which was in pretty good shape. I tore it down, powdercoated the frame, rebuilt both top and bottom end, new tires, bearings, seals, etc. After $1100 (bike cost $1800 in 86') i had basically a new bike minus front fork work. It lasted me a whole 10 hours of pure joy before i blew up the case. :p You saw that handy work at Dirtweek 01' and i'm glad its wasnt to a new bike with payments. All in all i'm still glad i rebuilt the bike. I got to learn things on a bike that wasnt going to cost twice as much to fix if i did it wrong. Older bikes are good for learning, right?
So you could put it like this, if you cant afford a new bike, stick with the old one. I cant see taking a chance of selling it and buying another old bike that you dont know what is wrong with it. It might wind up being more of a basket case. Atleast with the one you have, you know what has been replaced and what hasnt. If you can fix it for a reasonable price and No' mo still enjoys the bike, then keep it. If you feel that it will be nothing but problems (some things are like my old T/A) or No' mo has any thoughts of a 250, get rid of it. I would let the buyer know what was done and what wasnt or might need done. The buyer will still complain if anything goes wrong with it but atleast they were told.
Ok, maybe i just rambled? :(