I looked at a couple of cx500s and took one for a long test ride this summer. An interesting bike.
Willem has definitely given you good advice if you try it. The one I rode had the full fairing which didn't turn with the forks, the rear trunk and the solid side cases. Even after riding my 400 for 2 years and 15,000 kms, I found it very different, heavy and awkward as well as top heavy. But I think it is a pretty nice ride when it is "naked".
This one could be made naked and I would definitely go that way at first.
I found with the Moto-Guzzi style dideways V-twin and the shaft drive that there was a noticeable torquing to one side under hard acceleration, but one could get used to it like one gets used to the clunking of a chain, I think.
It cruised beautifully though, very stable and with low rpms on the highway. If that's mostly the kind of riding you will be doing it would be a nice choice. If daily rush-hour commuting across the Lions Gate is you goal though, you may want to start on a 400.
Before you conclude that it's a turn-key bike for $1k, check the age of the tires. They could be new or they could be over 10 years old. On one side of each tire, after the DOT number slug, there should be an additional slug with 3 or 4 numbers in it. This gives the week and the year the tire was manufactured. If it's a 3 digit number, then the tires were made in 1999 or earlier. Add $250-300 to your cost.
If the number is 4 digit, the first 2 numbers are the week of the year, the 2nd two are the year - e.g., 3702 = 37th week of 2002 (add $250-300).
Another consideration when buying from a friend (who is kindly selling it to you below market value): if you don't like it, you will kind of be stuck keeping it anyway - unless you outright don't like riding a bike and don't get a replacement.
Here is a blog posting by an owner who had a do-it-yourself approach to maintenance. I would recommend ignoring his homemade cdi units, however, he has reproduced some detailed discussion about maintenance issues which you may find useful.