How many miles are on the car you are looking at? You need to start the motor when it's cold as NKau suggested. Any type of smoke (other than condensation) is a sign.
Blue = Oil
White = coolant
Black = gas
My car likes to send oil through the tail pipes when I shift at 6,000RPMs. But never once lets oil through when I start it up or am crusing down the road. You're probably looking at a rebuild project, but we can't say for sure.
Every motor burns gas or they won't run. If it's buring too much gas (you can smell it at the tail pipes) than the O2 sensors are probably shot. But there is always something else that could be causing it.
Also, any ticking noises the car makes... those can be very bad. Rockers ticking away is OK, but most other ones indicate a motor on it's last legs.
How did the oil, coolant and maintence items look?
Now all that being said, a SBF especially the 5.0L motors are fairly cheap to fix up and get running great. You just have to know where to look. Typical rebuilds can run from 800 on up. New motors start at around 1,300 and up.
The Fox is a great car to own. They are cheap, fast and very easy to work on and learn from.
I'd recommend you read this thread over to give you an idea of what condition the car is is:
http://forums.stangnet.com/showthread.php?t=573378