It’s cup and cone, so the bearing race can get pitted if abused – see/feel if it’s rumbly or any play side to side, then check again.
Gear shifts should be almost instant and very smooth, a lot quicker than anything derailuer based, oh and able to do it without pedalling too.
If the shifting is slightly off, set the gears to forth and then adjust the barrel to match up the 2 yellow marks at the back, it’s more accurate on the underneath ones for some reason.
5th is direct drive and should be the easiest to push at set revs, but the system is more draggy than a perfect derailurer system.
That’s it really – check the axel nuts for cross threading and the cable to make sure it has a ferrule (or get one on there quick to stop it fraying), have a look at the holed lever for removing the cable and see what state it’s in. My 6 yo one is in bits (like the rest of the hub tbf).
I’ve the SG500 and a SG501 (uprated clutch) both are perfect inside but the jetwashed and ignored/abused SG500 on the mtb needs new cones and a new cable – you can get ball races from SJS cycles but the cups are part of the hub like all shimano – so that hub is due to be put in the spares bin for the mechanism. I think you’d be really unlucky to get an internally knackered hub – I’ve seen pictures of 1 on here somewhere of one that had fallen apart. You’d know 100 yards down the road as there is no-where for bits to move out of the way from in the hub.