So what you're saying is that some moron gave your father money and didn't ask for a receipt of any kind? (how long before he posts on this forum...

) How much did you sell the car for? How much damage did he do?
I'll start with the lawful, legal side of the situation. Right now the man has no rights to the car. He does owe you for the damage he did. You can still sell your car because you have no contract with anybody to sell the car. Your father's agreement means very little because he doesn't own the car. He could be represented as an authorized seller of the car, but he's not a used car dealer (I assume) so legally he can only make the deal on your car but not collect any money. So go ahead and sell it. Save the man's money because he is entitled to that money. The damages to your car are a separate issue and legally you can't keep money from what he paid for the car against those damages.
Now for the real world side of things. Get an estimate on how much the damage to the car is. Then take that out of the money you have from the guy and put the rest in away in a drawer to give back to him. Then sell the car to somebody else and make sure you get a bill of sale and sign over the title. Then if or when the original buyer comes around, give him the money you saved and tell him the rest paid for the damages he did, and that he can accept that or you'll sue him for the damages and keep his money until he sues you for it.