The closer I look at the pictures the more I see what you are saying. The fork looks to be twisted somehow. Checking it this morning I believe that is what is going on here. Given the low cost of this cycle the owner will probably just want me to make it work for him. The brakes were toed in by someone else at some point because when they touch the rim they do so accordingly. This tells me someone already tried to adjust for this mess and given the amount of riding this person will do perhaps I'll let him know about it and set up the brakes the way they were. He can make up his mind as to whether or not he wants to ride it this way... if it was my bike there is no way I'd leave it like this. Thanks for the help everyone... the more eyes the better.