To answer your question, yes a dealer can cut a key with the VIN #. You may need a title, registration or bill of sale for proof of ownership. As far as the price goes, what if the engine is blown, trans is shot, fuel pump is dead, etc...etc...etc...? Since it's an unknown, I wouldn't pay more than $200. $500 is too high for an unknown entity. The car's average retail blue book value is only $2000 if it's clean. Knock 25-40% off that because it will most likely have a salvage title, and if there is something major wrong with it, you'll be exceeding it's value real quick.