There are also new laws concerning those who have received notice, no more "I can help you" arrangements or interfering with any foreclosure process, banks don't due lease purchase deals.

My concern is that when I get the foundation repaired , the plumbing is going to break .

BUT, if your goal is to get started and you aren't concerned with counting someone else's money, maybe you can meet with the person to see if you 2 would be a good fit to work together.  

With this in mind, is it better to say I am interested in purchasing the house and then risk be ignored if they aren't interested, or simply say I wish to speak with them concerning a matter on the  house, for example, so they would need to call to find out what the issue is, and I can remove them from future efforts if they aren't interested?

Even if a bogus claim is made concerning your period of ownership, the costs to defend your ownership and the future owners' rights may fall on you. 

If you are really concerned about something bring out your contractor or other pro to have a look.

What other red lights should I be concerned about beside the standard DD requirements to purchase any PN?

I would like to be able to answer his concerns and I have some idea how but I would like for some of you to help me help him and help me.

I've been investing for a while and have really never been concerned with the implications of taxes due on sale.  

We do a lot of work in flood zones and from what I've heard regarding "stilts"(we call them pilings) is you're looking at 20-30k extra over a traditional slab with a crawl space....Most of our footings are within a couple feet of sea level so we've never needed pilings but if you're indeed that deep you defintiely can't pour a footing on top of muck.....The other concern is flood insurance - the lower your first floor elevation the higher the flood insurance - I'd imagine if your first floor is under 10' the insurance would be astronomical.....your best bet is to talk to an engineer, get a survey, and go from there.