why are you trying to help seller?

He sold you a car without proper title, therefore
he MIGHT sold you a stolen property. He made change on
the title paper illegally regardless his reason. You
can use police to put pressure on him, either return your
money or get the paper work straight. What do you want?

Let assume you get the title transferred at DMV, the the
original owner claim the car was stolen. Then you would be buying stolen property. In such case, lost money would
the least of your problem.