Glad your doing a little better today. I'm glad you found out about the insurance too. (see good things do happen).
As for the $800 --- if the car needs the repair anyway --- I would take the $800 of the selling price. Either way you don't get the $800 so let the car be someone elses headache.
Always take the things I say with a grain of salt. After all I'm a frog with curlers in her hair, wearing a bathrobe and flip flops. I don't think brains are real high on my list.