Also don't listen to earthe5ive about those prices. Wow, where did you get that stuff?
You can get a set of perfectly fine puncture resistant tires from the LBS for $17 a piece. You don't need to go straight to the gatorskins. You can get tubes 3 for $12.
He's also giving you numbers for things like cranksets (which you already have), freewheel (which comes included in your $180 wheelset), and repacking the BB/headset ($70? more like $7 for a tube of grease).
I'm not saying this thing will be cheap, but you're looking at probably $300-$350 to get it road-worthy.
Can you find out what model it is? It's usually written across the top tube, it looks like there is still some lettering there but we can't make it out from the picture. If it's a Varsity... meh, maybe not worth it. If it's a Sports Tourer or Super Sport or Superior, then is definitely worth riding.
ONE PITFALL I'd mention is that you are NOT going to be able to find replacement chainrings for that crankset. The inner is 118 BCD and the outer is I-don't-even-know. Before you ride it, definitely take time to replace the bolts on the chainring. I learned this
the hard way.