XBLA games come with two lisences, one is to the machine and a second is to the gamertag (Xbox Live account). So any game bought on that machine is infact bound to that machine and that MACHINE, reguardless of the accounts on it has access to those games. You can also use your Gamertag when logged into live to access your games on other Xbox's. So you could go to a friends house, log into your live account on their Xbox and download any game you bought and play it there so long as you remained logged into your Live account/Gamertag
But this is the bit I'd be worried about. There's ALSO a service to transfer lisences from one machine to another, this is in the case of unit failure or replacement but this can only be done on a machine once per year to prevent abuse. He could possibly sell you the 360 and then move all the XBLA games onto another Xbox of his after you bought it.
But I'm pretty sure you should have full access to all the XBLA games bought on that machine even if you format it and put on your own accounts.
Hmm, I'll test that right now. Delete some games from my HDD, switch to an alt account and see if I can redownload them for free.