Surely its a 1.9 pd engine?
Possibly a leaking (internally) EGR cooler
Its also common for people to tuning box/remap this engine/car and if it its used for towing or enthustiastically then the head often develops small cracks around the exhaust valves or the head gasket goes. Water loss only occurs when the engine is under load and hot, so static tests in the garage usually show nothing.
A drilled thermostat shows the owner or previous owner(s) definitely knew there was a problem. You should really consider threatening legal action if he doesnt give you your money back, but that has been a little weakened by you attempting to fix it.
Other areas to check include blocked/leaking radiator (check end tanks for tell tale signs) leaking. Lots of helpful info here: www.fordgalaxy.org.uk/ford/index.php
Edited by brum on 21/10/2013 at 23:41
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