I'm looking for advice on how to best approach this seller and also not make a major mistake for my family. 

My problem is that I have just been holding properties for too long, some approaching 30 years. 

Any advice on how to approach my first flip?

There are both positives and negatives to this approach for the new investor; the positive being there is no better way to learn than on the job.  

I found a couple of enticing auctions, in particular a duplex and a sfh, both of which are (according to the website) occupied.Both are incredibly cheap for their market, and assuming they are occupied they are at least liveable.

By creating a conversation, I feel that it may help me understand a more detailed approach to being creative.  

It's a follow the leader approach.

For many, it absolutely makes sense to invest in turnkey and you can find fantastic operators that provide incredible service and their advertised numbers match reality; you just have to shop around and due some deep dives into their operations and get referrals from their past clients and choose a company that you can trust.

As she is approaching retirement, she no longer wants to manage this rental property on her own, and we were instead thinking that she could pay off my mortgage, and then I would enter a "rent-to-own" agreement with her.

I like @Ryan Ingram approach to the early termination clause or lack thereof.