Tell him there is no way he will get what he thinks the bike is worth. The parts will not sell for squat unless he wants to put in time to recondition them. I do agree with him that 200 is a low ball. He could make almost that just off the wheels alone. I would offer 400 but no more than 500.
Redoing the bike may be expensive but maybe not as much as your think depending on how much you do and where you get the parts.
The ride IS the adventure. The destination is just to get gas!