Once a case is struck out can a claimant reapply for another case? I would check this out properly.
Since this involves a business and consumer, the courts will ask you, the business, to prove the goods were fit for purpose at the time of sale.
Since you have the text messages about the glow plugs before he bought the car, you can use that as proof the customer knew he would be purchasing an otherwise fit for purpose car, minus the fault already presented to him.
A friend asked me to be his lawyer for a small claims against his business and we won. Having been through that I believe you can easily win this case, however for the amount of time you would spend to prepare and defend the case, you could easily put into buying and selling a couple of cars and making a few k that way, so it's not logical to waste time on this case when you can spend your time wisely elsewhere.
I would tell the billy you're happy to refund him provided the car repaired back to the same condition it was sold to him in AND it be driven back to you, none of this funny recovery business.
Also, only email or text him from now on. If he rings, tell him to communicate to you in writing (so you have proof of all comms if needed).
How can the gearbox be stuck in 1st AND the key be missing? Even my old 1993 Mercedes didn't let me remove the key from the ignition unless the gear lever was in Park - how have they managed to do it?
Did they remove the ECU and key, fit it to another car and fit this with a duff ECU or something?
Definitely do a full inspection if it comes to it.