What to look for in a used SR5

[vlgi]

Depends on what work you are willing to do.

Its an old car so the most important is rust!

Sills and wheel arches are typical places to go on cars but there is a guide on here about common places that rust occurs.
http://www.aeu86.org/viewtopic/ae86-buying-faq/t/3415

You can if you have the time, skills, money and will, you can restore a rusted car, depends on what you want to do really. If the body work is fine then you can replace the rest of the components.

For the front suspension look for leaking dampers, rusty springs, most likely would need a replacement if that is the case, similarly check the bushes for wear / fatigue.

I know nothing about the rear axle or the trailing arm suspension to look out for.

Engine wise check for oil around the gasket, check the timing belt is it worn. Check filters to see if they are ancient or reasonably new, check dipstick for amount of oil in the engine, is it clean is it dirty. Check the pipes, anything rubber for perishing.

If the engine runs hear it from cold and listen for any bad noises.

Ultimately you can always rebuild the engine, if you want to do that.

I think whatever you want to do buying a car like this will require a lot of time and effort to get to a good state so make sure you're willing to do the work.

Generally its best to buy the best you can because ultimately if there is too much work, and you lose motivation, the poor car won't get the love it deserves and you won't get the car you deserve. Everyone loses ;_;