This way, they come in, strip the beds, take out all linens and towels to wash off site, replace with new ones, clean all surfaces, etc and they're out the door.

What are some questions we could ask the seller to figure out the behind the scenes of what, on the surface, seems like a great deal?

There's a lot of information here...I've barely scratched the surface myself.  

You have surface mold and airborne mold.

On the surface it is a property I would definatly liquidate based on solid business practices.  

Most of the time it's a matter of dealing with surface water on the outside (correct pitch, downspout extensions) or drain tile (a bit more involved) and bracing. 

The floors were extremely unleveled and the new flooring was already coming apart, in one unit a previous landlord spray textured over every surface of the property including the thermostat/door knobs/trim, in both units the kitchen and bathrooms were falling apart and barely above usable condition, the staircase in one unit was obviously illegal it was so steep, and the walls/ceilings in both units were a mixture of poorly cobbled together panels, cracked lathe & plaster, suspended ceilings that should have been replaced a decade ago, and entire surfaces made from something I couldn't determine.  

When he did surface he wouldn't give any updates other than he was checking on things.  

Private lending may sound risky on the surface, but it's actually a very safe, secure position.

I think a partner would be best at least on surface value as you have a TRUE partner who has a stake in making the deal work out.