Am I looking at the right thing? The little line running across the seat tube about 1cm above the bottom bracket?
It's hard to say, but personally I'm not sure that's a crack at all. It looks more like a scratch. I say that because:
a) it looks shallow, and
b) that is a really, really weird place for a crack to occur. There are four types of stress (if I remember my solid mechanics correctly) that could cause a frame to crack: shear (picture gripping a pipe with your hands next to each other and pushing with one and pulling with the other), bending, torsion, or tension. Compression wouldn't lead to a crack.
There's basically no way that you could apply enough shear force, bending force, or torsional force at that location on the frame to crack it (even a fatigue crack over time), so we'll discount those (plus, you'd expect to see other deformation from bending). That leaves tension.
It is totally possible to apply a huge tensile load to a seat tube, for instance by coming down on the pedals really hard after a drop. However, I would imagine that 999 times out of 1,000 it would fail at the welds, not in the middle of the tube like that.
I'm not saying you should buy the frame, but it might be worth asking the guy for more info.