Make it lighter? Lighter wheels, lighter bottom bracket, lighter components, etc. All of these changes would be pretty costly with a small loss in weight. The 1986 500 series had Reynolds 531 tubing for the main tubes only, stays and fork were not 531. The top of the line Trek back then was the 770, which weighed 20 pounds (3 pounds lighter). So a weight weenie would look for a lighter weight frame, and go from there.
Most of the performance on a bike comes from the motor (you), rather than a slightly lighter weight derailleur, etc.
In the vintage steel world, 23 pounds is pretty light, but not the lightest.
People love Treks, and a 560 is a nice bike. I have an older 560, which has a less desirable Reynolds 501 frame.
If you want an estimate of value, you need to post full size pictures.
Last edited by wrk101; 07-31-10 at 12:42 PM.