I think there are some features which you should deem to be essential if you want a bike that is going to be rideable right from the off, rather than a 'project' which inevitably ends up as a money pit unless you have a whole stock of parts at your disposal.
1. Alloy wheel rims - as you can see on that bike the wheel rims are shiny, indicating that they are steel. Braking on steel rims just is not good enough in this day and age of heavily trafficked roads (especially in London!), avoid like the plague.
2. 700c wheels - save faff with finding deep drop brake calipers etc. or if the wheels are FUBAR'd then you can get a cheap set of modern 700c factory wheels safe in the knowledge that they'll fit just fine.
3. Reasonable quality drivetrain - just check that all gear changes are OK (or parts look fine and just need adjustment/new cables) and the cassette/chainrings are not worn. Don't be fussy here as older 5/6/7 speeds with downtube shifters are perfectly functional and last a lot longer than modern parts!
4. Frame damage - look for rust/cracks/bent stays orr forks as above!
Finally, seeing as you're in London, avoid anything that looks nice and has horizontal dropouts - the fixie fashionista will hoover these up at inflated prices only to strip back to the frame and bin the parts. I reckon your ideal machine is a butt ugly (bright colours and speckles!) late 80's/early 90's job with 700c wheels and a basic shimano drivetrain that has been well looked after as a keen cyclists winter bike and therefore will be great right from the off.
Examples:
This one is too expensive really, but appears to be 700c wheels and light usage.
old raleigh
Here's one to be avoided - Peugeot (funny part sizes), steel wheels etc.
Old peugeot
This one is better (the decade or more between this and the last one makes all the difference).
Peugeot but better
This is pretty sweet so will probably go for a bit more than current bid levels.
Fondriest
This one looks OK, I suspect the size and pickup only is the reason it hasn't gone.
Raleigh without decals
This one looks great, only £20 postage. Ignore the crap photo, I've bought loads of stuff off these guys and they've been superb.
Dave Quinn 531
Hope that helps.