'Dents in the top tube - doesn't affect performance'. But it could affect structural rigidity.
I'd look at the bike in the flesh and make a judgement. If the dents in the top tube are merely cosmetic then you're okay, but they're deeper, then your bike coud be seriously weakened.
How much is it worth?
Not sure - again would need to view in person. He says it needs a service - this can mean a variety of things. My idea of service may is a complete strip down - new cables, brake blocks, grease the hubs, true the wheels, etc. His might involve less work.
Might be worth asking him about all of the above.
Just noticed that you'v e worked out £200 work required. Then if you can get the bike for less than £100 you'd have a great bike for £300.
Like I said, the dents worry me. Check them out if you haven't already