You have a strong case! You can win in small claims court.
Check with your state to see the limits of what you can sue for in small claims.
The before pics, especially the last ones you posted, are good!
Getting the original ad, the sellers statements, the time-stamps you have, all excellent.
Get a professional valuation on the guitar as it stands now.
Prepare your case with all photos, evidence, etc. (getting all your ducks in a row).
Tell him you plan to go forward and show him some of what you have.
Then tell him what you want to "make this go away". Do not listen to counter-offers.
Do not negotiate. Stand firm and let him know you are prepared to go all the way no matter how long it takes.
Schmucks like this should not be in business! Period.