CarFax only knows about problems if they are disclosed to them. The dealer’s knowledge of the car is probably only as good as the CarFax they presented to you.
The dealer did not disclose the past problems with the car. I find it highly unlikely that they could get away with selling a car that cannot be insured, even if it is by just your insurance company. The dealer is the expert and thy have an obligation to sell y out a car that can be registered in Colorado. If CO is like MD, you can’t register an uninsured vehicle. Get an email from your auto insurer stating that they will not insure this E350 and why. Take it to the dealer and demand your money back. It doesn’t matter what they did to the car, they sold you a car under false pretenses. If they did not know about it, they did not commit a crime, but they still have no business selling a car like this. If they refuse to let you out of the deal, contact the State’s Attorneys office and ask for advice.