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If the seller agreed to a refund if the starter was sent back, the seller should honor that refund wheather the starter actually works or not. Hell, since it works he really should have no problems refunding since he can turn around and sell it again to someone who knows how to wire a starter.
If the seller didn't agree to a refund but the buyer sent it back anyway, well, that was a dumb move on the buyer's part to just expect a refund, and it should be considered forfeited.
But if the seller did agree to a refund and now won't refund and won't ship the working part back.... then all you can do is tell people on the internet not to use this seller again. The money is gone and move on.
From your odd description of the entire ordeal it seems as though one of both of the people involved in this transaction really shouldn't be doing business over the internet/long distance as they don't sound like they have the greatest grasp on the business.
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