When you say outside that could mean a lot of different things. If you mean totally open to the elements, I say that there is a good chance that the motor is ruined, especially if you live where the temps get below freezing. If the motor has been well covered on a continuous basis, the motor stands a better chance of having survived.
You best bet is to get the guy to let you take the motor to a good machine shop for a teardown and inspection. They can check the block and heads for cracks, etc. This will cost a couple of hundred dollars. If he's unwilling to do this I say don't mess with it. While $500 is a good price for an HP motor (you have confirmed that it is an HP motor, right?) you can still find good deals out there on motors that have been stored correctly.