[jhv48]

The concern, as I see it, is that the original owner (the guy you will be buying the car from) never registered the car. Therefore, as of this moment, DMV has no knowledge of the existence of this car. If you buy it from him, it's most likely going to be perceived as a turnkey car. And you don't want to go down that street with the DMV. Once alerted, they could make it so that the car can never be registered in California and would have to be sold out of state.
If it were me, I would gather up all the receipts and the MSO and try to register it for the first time and get an sb100 exemption.
Just tell DMV that the car has been a project car and was only recently completed. If you're worried about the mileage, replace the speedo.

Still could be trouble though. Not sure I would mess with it unless it is at least $10k under market.

And, finally, the owner probably won't want to register it before he sells it to you because of the registration fees and sales taxes he will be asked to pay.