I got sidetracked last night and didn't have a chance to get out to the shed to measure the headtube until just now. muddyfox_courier has it right: 1 1/8", although I just measured the steerer of the fork that came off of one of mine, Rock Shox Magnesium, and it's 1 1/10" tube, but it appears to be a 1 1/8" headset. The wall thickness of the head tube is what made me think it took a larger headset, but as I said, my experience is limited.
Shame about the cracks. I have a few frames that are cracked and I'm working with a welder to get them repaired. Average price for repairs seems to be about a hundred bucks per frame. That's not including all the time I spent stripping the paint with Aircraft Stripper, and all the time I'll spend prettying up the repair areas with a grinder, files, sandpaper, etc. after I get the frames back, not to mention the time to re-paint the frames and the cost of the paint and equipment, plus the cost of decals if I decide to go that route.
When I'm done, though, I'll have some sweet classic bikes, and although the repair areas will be noticeable in a few areas due to added gussets, the bikes themselves (I think) will be stronger than they were originally. There may not be a market for them, but on the positive side, because I'm bringing these bikes back from the dead, I won't feel the least bit guilty about painting them whatever color I want.
I think a similar fix would be the best that could possibly be done with the OP's colleague's bike, but the question is: does he want to expend that level of effort? If that frame was in my size and if it was inexpensive (or even better, free), and if it was nearby (so I wouldn't have to have it shipped or drive a long way to get it), I'd take it off his hands and give it a go. Maybe someone local to the OP would want to try breathe new life into that old frame?
