Looks like an Isetta to me. I always wanted one of those when I was in high school--mainly because they were cheap. I also wanted a Fiat 500 for the same reason. Nice picture.
I love it. It is an Isetta, yes. See http://www.microcar.org/1997/08.jpg . The engine probably isn't a lot bigger than the lawn mower one. :-) 28 years is enough - it's time he started on it!
Not necessarily. After Sheila's picture, I did some investigating - there are places in Germany who still make complete new floor pans! It could yet run - but you're right - it would cost quite a bit, yes. Having said that, there's a fully restored one on ebay for $19,000!!!