Loved the original ad pics, and as you said Ben, a boat with a lot of potential. Maybe its my inexperience with the construction mentioned, but I would be far less scared of a true fiberglass, or true wood construction. Its the combo that scares me. I think about all the places water can collect between the two materials, and wood rots when that happens. That's a shame for such a pretty boat. Unfortunately, I think the true value of that boat is less than $40,000...let alone asking price. Not to mention the need for probably $100,000 in reserve for refitting as a starting point.
Still, I don't think you should discard the idea of a liveaboard. Maybe that boat isn't the right one...maybe your marine trader isn't either (though you could do an update of systems - a/c, head, galley etc - to make her more comfy and reliable). But maybe the boat that would be a home and a vacation spot at the same time is out there. There are a LOT of boats on the market, and some are projects, while others have had money poured into them and are immaculate.
The way I see it...there are two kinds of people. The first says, "yes, I thought about trying that." The second says, "I tried that." I believe we only live once, and at 46 I am still trying new things.
P.S. - I just bought Belladonna and am preparing her for living aboard.