There are several things that you might want to look. Make sure that the owner allows you to field strip the rifle. If he doesn't allow you to field strip the rifle, walk away from it. Here are some things that I look when buying an M16.
1. Look at the appearance of the rifle. Look for signs of excessive wear on the finish; check if the rifle has been refinished (anodized for aluminum) and check for cracks on the stock and forearm. You may also want to check if the contact areas of the disassembly pins if are worn out. There are some that had the front pin holes re-welded. Wiggle the front and rear sights. If there's play on the rear sights, that could be a problem. It also speaks of the rifle's age and how it was maintained.
2. Pull the trigger (make sure the rifle's empty). If you notice any of the pins that are related to the trigger group "walks" or is loose, you won't get constistent trigger pulls. Again, this is a sign of an aging rifle and an improperly maintained rifle. A rifle that is fairly new has an authoritative sound when the hammer drops. A rifle with a weak hammer spring doesn't.
3. Make sure that the barrel is not worn out. If it's a chrome bore barrel, you're in luck. They usually last three times as much as a non-chrome barrel. Take the flash hider out, and insert a 5.56mm ammo into the bore. If the bullet goes through, then, it's a worn out barrel.
4. Try and get a chamber erosion gauge. It's a rod that you pass through the chamber. It has two readings at the end of the barrel. If the second ring on the rod shows, then the chamber is eroded.
5. Check the bolt carrier for excessive wear. Disassemble it. Check for burrs and excessive erosion on the bolt face. There is also a go-no-go gauge for the firing pin called firing pin protrusion gauge. Excessive firing pin protrusion can cause catastrophic damage on the rifle. Check the bolt cam pin. Check if it's worn out. Check the bolt carrier key if it's loose or not.
6. One important thing to watch out for is the gas bolt rings. To test if they're still okay, remove the firing pin retaining pin, the firing pin, and the bolt cam pin. Hold the bolt carrier assembly upside down. If the bolt falls, the rings are worn out.
7. The next thing to check is the recoil buffer and the action (recoil) spring. Check for cracks on the buffer. If memory serves me right, the correct length for a standard action spring is somewhere in the 18.5 inch length.
8. Check the orientation of the rear sight. If it's in the middle, chances are you have an aligned barrel. If the rear sight's orientation is abnormally on either side, The barrel could be bent.
That's all I could remember for now. Hope this helps.