It seems to me that you have given the dealer plenty of opportunity to sort the car out and there seems to be more than a hint that the dealer is dragging his feet because he knows he's going to be out of pocket if he does the work or gets it done.
So I reckon you're entitled to have your money returned.
I would write (recorded delivery) asking for your money, explaining why, and insisting on a response within a week. If there is none, write again, threatening court action.
It's just possible this will concentrate his mind, but you should be prepared to start legal action via the small claims route, bearing in mind this is not without costs (though if you win you should be able to recoup these).
You may wish to take legal advice, but this is not strictly necessary and the small claims process is relatively simple.
If you got the car very cheaply you may decide it's not worth it.
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