Look for any evidence of bent frame - I always back up several steps to see if the forks line up with the head tube. I also feel the top/downtubes for any bulging. Look at all the lugs to make sure that there are no cracking/loosening issues. Don't forget to look at the tubing from the bottom for any dents, etc. Be suspicious of any aftermarket stickers on the bike, unscrupulous sellers sometimes use these to cover dings/dents.

Any frame damage at all for anything other than some super high end collectible thing is pretty much a no-no for me, unless it is factored into the price and I'm more or less buying the bike for the parts.