Where does a sellers responsibility stop?

Boy, what a bummer. It could be something simple. Did you walk through any trouble shooting with the buyer? If you offered a refund he shouldn't be miffed; a refund is generous. You're not a dealer where follow up service is expected. In the used market it's buyer beware. The problem is, the buyer could have done anything with the preamp once he left your house. You have no idea way to know what happened. After you refund his money your stuck with a broken preamp, so i guess it's seller beware too.

I once had a guy return a CD player because it wouldn't play through the digital out. When he returned it I plugged it in and it worked great. Turns out he was using the digital out direct into a home theatre preamp that didn't have a DAC. He just didn't know what he was doing. Turned out OK because I still have that CDP and love it.

I would take it back provided it still worked in your system & was in the same condition as before. If there are any signs of abuse I would refuse the refund but maybe like in Budrew's situation, the guy didn't know how to hook it up. Then again maybe it's tube related & that gets into a gray area.

If everything's OK you won't have any problem reselling if it's the LS5 because you can reverse the SOLD on the ad.

If he came to your house and demo'ed it and then he took it with him, I would say your responsibility ended at the front door. It worked fine until it was out of your sight.

It would be different if you had shipped it to him. Then it is your responsibility until he confirms it works at his house.

I think you are being more than generous in taking it back.

Those are my two cents worth anyway.

Thanks for all your responses. He brought it back and I took a close look at it and could see no sign of abuse. Audio Research is notorious for having the toggle on/off switch go out through constant use. I'm betting that it was just bad luck and it happened after he took it home. He still wanted the unit, so, we agreed that I would keep half the money until it was repaired, which I would bear the responsibility for, and then he would return to pick it up.
That seemed like a fair compromise. This way if the repairs show abuse I use the money he left to pay for it and return the rest making him responsible. If the dealer sees it as a non-abuse repair situation I pay for all the repair and still sell him the pre-amp. I think in dealing with used equipment you always should treat the other party the way you would want to be treated, even if they are obnoxious.