Over and above the sidewall damage and the plug, what would concern me most about this vehicle is the disparity in treadwear from front to back. That disparity shows that the tires have not been rotated as they should have been, and that is an integral part of the required maintenance on an AWD vehicle. That disparity could have already led to premature wear on some of the components of the AWD system, and that could lead to very expensive repairs.
And, of course, if the previous owner failed to have the tires rotated as required, then you have to wonder if he/she skipped other vital maintenance procedures.
If I was in your situation, I would return the vehicle, out of an abundance of caution.