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I forget where this all begin, but reading between the lines I'm guessing James has told you he's not going to give you your money back.
You need to dispute this with paypal asap. The wheel arrived in a condition that was less than you were expecting, the issue with you trying to fix it has muddied the waters but let paypal make their decision.
I honestly feel for you, and given what you've said I know you wish it would all just go away, but you can't just let him walk off with your money.
I still can't believe he charged £25.00 to post a wheel ...
Wait, what? who have dealing with them? you or @Richard1982?