I think the real crux of the issue is, what was ToadU's intended outcome of this whole mess? Did he buy the lady's car because
1. He was basically obligated to make the customer whole one way or another, and he tried to accomplish this with the least amount of headache, regardless of the customer's feelings?
Or 2. He truly wanted to fix the mistake AND have the customer leaving satisfied and happy? I'm betting he chose #1, and here's why:
There are several ways this could've been handled, and they're all not necessarily right nor wrong. He chose to buy the car without mentioning the screw-up. It's a good plan, and honestly, I might've done the same thing in that situation. By doing this, he basically pays for the mistake and makes the customer whole, and as an added bonus, the customer leaves happy and satisfied. So he chose #2, right? Hold on a second. The employee then blabs about what happened to the car, and the lady is upset. Toad then tells the lady too bad, you got your money, now get lost. Option 1 has been chosen. The lady is made whole, but she isn't happy about the experience. Yes, her demanding more money was wrong and unreasonable, and I'm not defending it. But I think she was mostly saying it out of anger and didn't really mean it or expect to really get anything more. Feel free to disagree on that.
If Toad wanted to choose Option 2, he could've waited for the lady to calm down a bit, and calmly say something like, "Ma'am, I am sorry for any feelings of deception I've caused you. I just wanted to resolve the problem and have you leaving here happy and satisfied, and I thought you would be very upset if you knew your car was damaged. I realize now that that was the wrong way to handle it. I should've been honest with you and told you upfront what had happened. You have my most sincere apologies. Now, I still want you to leave here as a satisfied customer. What can I do for you to make this right?"
Now, he and the customer can talk it out and come to an agreement so everyone is satisfied. If the customer is still being unreasonable such as demanding thousands of dollars, then he can explain how that's unreasonable and how he already gave her a generous amount of money and continue to try to work it out. If he's still not getting anywhere after a few minutes of that, THEN he can calmly and politely tell the lady to leave.