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You don't need a working speedo to pass an MOT

When a car gets down to very cheap banger status a lot of the value is down to the length of MOT left. For example I paid £275 recently for a J reg Sierra because it had 8 months test and 2 months tax, without that the car was only worth its scrap weigh in value.

Might be open to being charged with having an un-insured vehicle

IIRC the rear is much less sensitive to unbalanced wheels so you have probably rotated an unbalanced wheel to a better position

Have a look at this link from the Citizens Advice Bureau http://www.adviceguide.org.uk/index/your_world/consumer_affairs/buying_second_hand_vehicles.htm

There are 3 on autotrader well below 2k, not exactly common but they are out there

Sierra XR4x4 ? stripped out and the suspension sorted it would be a lot of fun on a twisty track/road. Your budget would get a decent one and leave lots of cash for mods

You can have just as much fun welding your car up :D I managed to find out the hard way that arc eye is not a good idea, it was very painful and being almost blind for about 12 hours was worrying

It uses the brakes to limit the power

As said above as long as all the wheels are off the road you are fine. The towing dollies normally lift the front wheels off the ground in effect converting the towed car into a trailer. But as the rear wheels of the car are still on the road I am not sure if the car must have tax, test and...

No it needs to be taxed, tested and insured for it to be towed (well apart from going to a prebooked test*) I am not sure about towing dollies which convert a car into a trailer edit - *would still need insurance though

If the boot floor is bent it may turn out to be an expensive repair

Do you mean that the tyres are wearing correctly and the car is handling correctly except for the fact that steering wheel requires to be pointed slightly to the left to steer straight ahead? Then the dealer probably is correct and they have set up the allignment correctly. What they have done...

Could be the starter on its way out. I have had a starter solenoid start sticking which gave exactly that sort of problem - random failure to start, electrics all OK, battery OK

Not true :) You can drive to a pre-booked MOT without tax, you must have insurance though. Have a look at the last item on this nice offical government page about SORN if you don't believe me http://www.direct.gov.uk/en/Motoring/OwningAVehicle/UntaxedVehicle/DG_4022058

Seized cars often lose their service book which is a problem because if the owner couldn't afford the payments what else couldn't they afford?

If you are towing on a rope the person steering the towed car will need insurance

If you have lost the V5 you can apply for a new one using a V62 form and change your address details at the same time, DVLA will charge you £25 for the replacement though. You can download the V62 form you need from this link - http://www.direct.gov.uk/en/Diol1/DoItOnline/DG_4017825

I had a 307 2L HDI as a company car for a few months, was quite nice but the flywheel failed - turned out to be a known problem so watch out for what feels like clutch judder.

Sticking central locking solenoid perhaps?