[1]The experts have spotted the cassette lockring - it's a cassette. (The word "LOCK" printed on the ring in picture 3 is a strong clue!)

[2]Given the state of the bike, and the fact that it's been ridden a lot without lubricating the chain, I'd say any performance optimization (e.g. SRAM vs other compatible brands) is probably not worth it. Optimize for cost. You may wish to help your bro by showing him how to clean and lube the chain - I could be wrong but it looks like its been ridden w/o lube for a while. Like 15 years!

[3]Before you spend the money, check the front chain ring. If it's worn, you may wish to find a cheap replacement on ebay. But you do need a new cassette and chain as you've pointed out. And as skoda2 has pointed out, you need new derailler guide and idler wheels.

If this is a favorite bike, or it has features you like (it looks bomb-proof - that double top tube with the lock is kind of cool) this may be worth it. Don't know the used bike sitatuation in Oz, but you may wish to price used bikes and compare to your repair cost.