get a compression tester, they're cheap. be sure to test with the throttle all the way open (and ignition off!). compression should be around 165 minimum if it's healthy. if it's low, squirt a *little* oil into the cylinder, and retest. if compression goes up, it's rings/cylinder/piston. if it doesn't go up, the valves aren't closing.
Pull the exhaust valve cover. look for scoring/galling on the exhaust cam. check for metal/rubber bits everywhere. there's supposed to be a rubber o-ring on either side of the cam chain on the cam. if it's not there, it's in the engine somewhere.
pull the dipstick and smell the oil. if it smells like gasoline, the petcock seal is leaking. you'd want to dump and change the oil right away anyway.
see if it shifts thru the gears.
see if the front brake works. if not, open the front master cylinder cap. if there is a bunch of crusty stuff in there, the lines will need to be cleaned/replaced, and the caliper piston is probably in bad shape (pitted). look for leaks at the caliper if the brake works.
see if the rear brake works.
pull the bike up, see if the wheels spin freely, no wobble, no weird grinding noises.
if possible, see if the lights/signals/horn work.
check for cracks on the top fork clamps - this is a common problem, and you should replace them if they're cracked.
look for oil leaks at the base and top of the cylinders. expect to replace those gaskets if you see oil there.
as for the stain below the bike - if he pulled the alternator cover at some point, he might be leaking a bit of oil there. not a big deal. a new seal there and you're good to go. don't try to cheap your way out with permatex, on any of your gaskets - you'll end up clogging your oil passageways in the head and you'll eat cams and followers as a result.
expect to replace fork seals, brake pads, chain, caliper seal. sprockets, tires, tubes, battery, oil, wheel bearings, air filters, at least a couple lights, plugs, brake lines, brake fluid.
expect to repack the steering head bearings with new grease, and to clean and re-grease the speedo and tach cables (the tach cables are almost unobtanium!)
if the exhaust is clean and solid, don't cut it to make a custom exhaust - sell it to a collector to finance your custom exhaust.
if you do buy it, get it running well first before you customize it. trust me on this one.