Most of your questions have been answered in various sections of this forum already, but I'll give you the cliffs notes version of answers for most of them.
Places to check for problems?
Chainplates (usually leaks around them because they aren't sealed with any level of frequency by most - including me)
Gudgeons (wear location, and stress, can leak)
Winches (same as above)
cabintop winches (same as above)
ANY new(er) hardware (anything not original that previous owners installed is immediately suspect)
You can tap of areas (lightly) with a metal object like a box wrench, and determine hollow/thud (bad core) versus thwack (solid core)
Examples?
Good core:
https://www.youtube.com/watch?v=Hp_o2JJNc88
Bad core:
https://www.youtube.com/watch?v=VhSt5GAho2U
Mast step (again stress area, but another easy way to check it is, if it's level, if its not, its probably bad, then use above technique to see how bad, and how far out).
Sail age?
There are several sail manufacturers that post here, so they can give real numbers, but I can tell you that my laminate sails from 2002 that had very little use (maybe used 50 times?) still look pretty good, and hold their shape well. Storage and care are important. ROLL your laminate sails (do not fold)
Price of sails (pick any manufacturer, not just Doyle - but contact Doyle Boston-Tac directly for pricing quote)
But depends... Full dacron, cruise quality, you can get a decent Number 1 for about $900, and mainsail for around $1000.
The sky is the limit from there as you go to better and better materials, from Flex 13, to Kevlar, to Carbon...
A full set of mid-quality racing sails (#3 105% jib, #1 155% genoa, Loose foot main with 1 reef, and #1 spinnaker) will likely cost you more than the boat/motor/trailer will cost you.
By the way I can give you quotes from 3 manufacturers from 2 seasons ago, if you email me shnool at yahoo Prices are up about 5% from then.
Mast Rigging
Mast rigging is easy, can't figure out why someone would use a crane on the S2. Move the mast back, with someone/something holding it up about 10 degrees, put the pin in the tabernacle. Leave upper and lower shrouds attached, and backstay... attach the jib halyard to the end of the spinnaker pole, attach spinnaker pole to the spinnaker ring on the mast. The angle of spinnaker pole to mast should be just less than 90 degrees. Run a line to a block attached to the stem (can use tack attachment point, but that scares me as it could slide off) Run a line from the primary winch to the stem block, and to the tip of the spinnaker pole... you can now WINCH the mast upright, with another person "steering" at the bast of the mast. Once the mast is up that person should hold the mast in place, while the one who was winching before, goes forward and puts the headstay pin in. There you go the 2 person method for raising the mast (with no more equipment than is ALREADY on the boat). Yes I've done it this way before, yes it works. I actually raise the mast myself, using an A-frame and a mast crutch (which is more involved, but it also works, look it up - chances are you'll find my pictures - yep google a-frame mast raising system, I'm 4-7 pictures on there, and 3rd on Bing). If you go the A-frame route, make sure to add a person the first time or 2, just to make sure you have help while you sort out your equipment.
Here is the gin pole type system (again not an S2, but a good picture how the spinnaker pole works to do this):
Here is the A-frame system (yep that is my old boat, but you get the idea better by this picture)
3 people can raise the mast without any kind of rigging at all. 1 guy slides the mast back on the shoulders of the other 2 (spreaders must pass over the 2 people standing as far aft as possible). Again lowers, uppers, and backstay attached. Slider, puts pin in bottom of the mast into tabernacle. While the slider/Mast guy pulls on the mast from the cabintop, the 2 aft guys walk up the mast hand over hand. Its better to step the mast quickly this way. This is how you raise large ladders too. 3 able bodied adults, should be able to stand the mast up easily. Keep your shrouds clear of winches on the way up, and the backstay free of the outboard, and tiller (ask me how I know check these things before you start).
One last word to the wise... as we just raised 4 masts this past weekend with 3 guys and little effort (2 catalina 22s, an Oday 26, and a Macgregor 26x)... if your rigging is already tuned (as in you haven't loosened the shrouds before you lowered the mast), the rigging will be so tight that getting the forestay pin in will be difficult... My suggestion is, LOOSEN YOUR SHROUDS! You must retune your rig anyway, why not make getting the stick up easier to start?
Ok there you go, your questions answered in a post without having to search through for 4 topics.