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From what the seller is saying, everything is in working order and running great. He has had the car for 2 years, he bought the car with a salvage title, and only know that it was due to water damage. He is selling it due to financial stress.
1 ) Lets assume that everything the seller said is true, how MUCH would you pay for this car knowing the above details?
2 ) What are some of the questions I SHOULD be asking the seller?
$6-8k. It's the first year of the 350z and it's salvage, which means when it comes for your turn to sell it you won't get much for it (Like 2-3 years later down the road or maybe longer if you keep it longer). And depending on what insurance company you are with most don't do full coverage on a salvage vehicles, ie: stolen/crashed it's out of your pocket.
I'd try and avoid salvaged Z's, just wait a little bit, you could easily find a clean titled one for a couple thousand more than what the above one is worth.