Your last question first, the 940 rims will not fit on the V70.

$1200 for a 125K mile car is pretty good, but it is a 2001(!) which is not known for reliability - first year of the 5 speed automatic. Of course there is no rust on a CO car, a nice dry climate compared to the upper midwest.

I would wait out winter and look for a 2004+ V70, preferably a 2007 with the 5 cyl engine, or a 2010 with the 6 cyl (much improved) XC70. Because your car still runs nicely, there is no hurry.

OR,

You could buy the CO car and drive it home. If the tranny or the other new electronics fail, you won't be out much. Liability only insurance should be cheap.

Mechanically, totally different than the 1993! Everything is crammed in to the front of the car. Compared to BMW, MB, Audi, the V70 is easy to work on and the parts are reasonable. The 2001 should have had the Tbelt changed at around 100K, ask for documentation (the neighbor can ask for a printout of all service done by the dealer). It is a PLUS to have maintenance history.
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Keeping it running is better than buying new