I find it difficult to understand how the previous owner(s) stripped the gears - never seen anything like that before. You ask should you fix the gears or fit a DRO. Its got to be the gears and a complete strip down to find out what else is wrong. The half nut and cross/top slide nuts/screws could also be suspect. The DRO is simple to fit (magnetic strip under the cross slide preferred) and can be installed at any point. Sorting out the gears is a biggish job but not difficult.
Keep us posted on your progress,