This sounds like a good one to stay away from.
, none of the small SB lathes have a gearbox per se. They have the multiple speeds created by the position of the drive belts on various size pulleys, and they have a direct mode and a backgear mode.
In direct, there are no gears in operation. In backgear (used for a lower set of spindle speeds) there's a pair of open gears in operation within the spindle drivetrain. No oil there to get cold as I recall.
Damaged backgears are a common South Bend problem. The seller may well know the backgears are bad and could be simply trying to hide that by claiming it wont go in gear. Been a long time since I ran a SB, but as I recall you open an access cover on the headstock, slide a pin to its outermost position, and then move a lever to engage the backgears. Not much reason for something so simple to be inoperable.
$1000 should buy you something to work with, and not something to work on.