Were I you, I'd hold out for a newer model... Though there are some unique aspects of the early B16 cars that do make them cool, its gonna be a good bit harder to find parts... both for the engine, and those problematic brakes. A later car with a B18 will make for a much more usable daily driver. Especially for someone not totally familiar with the breed.

I also think that $800 is on the steep side for what you describe. If its got lots of surface rust, I'd expect it'll probably have some significant nasty rust. When you look at it, look carefully. Floors and inner front fenders (as seen from under the hood) are common places for nasty rust. There are other areas too...

As for seats.. you will be hard pressed to find any car from any manufacturer older than '68 that has head rests. And yes, it is a significant safety issue. It isn't hard to find newer seats that will work in a 122 though. Loots of folks here have done just that.

-Matt
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-Matt '70 145s, '65 1800s, '66 122s wagon, others inc. '53 XK120 FHC