Such a bad decision to take it back; for all you know he could have drained all the oil out the shock/fork just to be an arse. You ride it / sell it / whatever. It breaks. Then what?!
I know that is elaborate but the point I’m making is Caveat Emptor exists for a reason and, with all due respect, you are both daft for buying/selling/accepting back goods that have been exchanged.
I know there is the argument of doing the right thing, but you did that before you took his money; you gave them ample chance to view and inspect the bike. Not only do you have the backing of everyone on here to keep the money and let the issue go, but you also have the backing of the courts.
It isn’t like the bike doesn’t work or ‘owt; it’s only a scratch!