Damn thats alot of rust on the outside. But for $170 its not bad. If the surface is that bad, im afraid to ask how the frame rails, floorpans, battery tray look like rust wise.
Worst case scenerio, you pull a couple parts off sell them and you got your money back. As far as v8 swap, I dont think that car will be up to the task without serious, serious work if the rust has gotten to it. IMO find a 75 280z to do a v8 conversion on. I was able to pick mine up running with way less rust than that one for $300. So I would part that out and use the money for a beffier 280z for a v8. (this is all just my opinion, do what you want).
Reasons to go for a 75 280z instead of a 240z for a v8 swap:
-Thicker sheet metal (a little stronger than the 240z for the torque most v8s will make)
-Bigger Frame rails (makes better tranny mounts instead of floor mounting)
-Still smog exempt if 75 model
-Early model will still resemble 240z (tank size, low trunk etc etc)
-A little more developed than the 240z (electictical system, heater/ac work better, comes with rear sway bar, fumes not as bad)
-Already has the r200 and beefier stub axles
Thats what I think anyway. Either way, welcome to hybridz.