I recently did a conversion of that exact bike, a Raleigh Capri. I built it up for a friend of mine and he loves it. We were able to keep a lot of the parts bit I also had spare parts from another Raleigh I bought at the same time. I got the bike for $10, so I would probably say that $50 for the frame alone is a little steep, but it will make a very solid and decently light fixed gear. Still, I would try to talk the guy down to at the most $50 for the whole bike, and hopefully lower than that, especially since the tires look to be dry rotted and aren't holding air, that alone is at least $30 of stuff to get the bike rolling.

Anyway, from the picture it looks like the only thing you'd have to scrap would be the wheels and the pedals. Save yourself the agony and get a new fixed wheelset that matches. The cranks look like they are decent three piece cranks, but the crankset on mine had a fused chainring cluster that was part of the drive side crank, so I got a new crankset that was better suited for conversion to single speed, one with detachable chainrings.

The most difficult part of converting that bike will be getting the chainline to work out right. In my case, I was able to flip the bottom bracket spindle and get an acceptable chainline, but this will depend on what type of crankset you are using as well. Other than that the conversion will be a simple matter of buying a few new parts, strpping the bike, and re-assembling it. The greatest expense for me was buying new tools.