In my experience...

Body

Rusty 205's are scarce, even early A & B reg examples are usually pretty rust free, although it's worth checking the rear hatch for signs of rust around the back window. Check carefully for signs of accident damage, particularly on the GTi's. Also on GTi's, look out for signs of it having been stolen/recovered - One key should work the doors, hatch and ignition.

Engine

Petrol models get a bit smoky with age, but there are no real problems otherwise. Cambelts on (1.6, 1.9 or diesel) need replacing at 48,000m intervals. Look out for signs of head gasket problems on 1.9 models. With 5,000m oil changes and 50,000m cambelt changes, the diesels will go on for ever.

Gearbox/clutch:

Clutch cables can get stiff, making for a heavy clutch action, and the gear linkage will not take too much punishment. Clutches on diesels should last over 150,000 miles!!

Brakes

Check the brake pipes for corrosion, and ensure that they are replaced with copper (which doesn't rust) if required - it's well worth the slight extra cost.

Steering & Suspension

Do check for perished driveshaft gaiters, and play in the steering rack.

Cooling

Check that the thermostatic fan comes on when the temperature goes up, and that the heater works efficiently.

Wheels

The spare wheel lives beneath the boot floor (not the best place). The 1.9 Alloys are easily kerbed, particularly if the wrong tyres are fitted (the right ones have a protruding ridge on the sidewal).