I probably have the same circular cracks in the glass around the mast step on my own 1979 O'Day 25 that you describe. I've had the boat for 6 years now, and haven't suffered any leakage there (or anywhere else, for that matter). I haven't noticed any significant flexing there, and I suspect that the cracks are simply crazing that doesn't go beyond the gelcoat.
Aside from the engine (I've got an old OMC Zephyr Saildrive 2-cycle -- a story in itself), there are a couple of things I'd look for in an old O'Day 25. Check the wood around the straps where the fittings that hold the side stays bolt down in the cabin. If there's discoloration or other signs of seepage, your deck might be soft directly above it. Also, bounce around on the deck near the side stays -- you might note some softness there.
I think the O'Day 25 is a fine old boat. It's kinda like an old Volvo station wagon -- it's built like a tank. But it's also fun to sail, stable in a blow and pretty easy to maintain (until you have to crawl down into the engine compartment). Unless the boat you looked at had a lot of extra goodies, though, $7,000 sounds a little steep for an '82. I bought my '79 six years ago, it was well maintained and full of nice goodies (like removable teak floorboards on the cockpit sole and several extra jibs), and I paid $5,000.
