I just sold my Mac Mini on eBay and the buyer wants Mountain Lion installed instead of Mavericks or Yosemite... Any idea why?
I have to agree, the buyer gets what OS was advertised in the auction and nothing else. It is not your responsibility to be changing the OS for them after the sale. Especially if the buyer already has the machine.
Just be prepared for the buyer to try and claim that it is not what they purchase though. I know it sucks, but Ebay will most likely side with the buyer, so just be prepared.
I think in this case the seller is okay so long as ML was advertised. If no OS was advertised then I would also think he would be okay. The buyer didn't mention damage when he wrote him, he mentioned the OS. The initial e-mail would have mentioned all presumed issues. PayPal is buyer-orientated but they also have a duty to side with the party that is in the right.
The OP did not mention what OS was advertised, if any.