That looks like a cracked weld to me. I've only had one frame in my life do that, an old gt rts 2 (I say old, I owned it from new and it had a very easy life).
If the frame was sound, not a bad price despite it not being a merlin, but a raleigh torus.
The fact that it looks to also be faulty I'd be sending it back. Ti frame repair isn't cheap, you'd be better off spending what it would cost plus what you paid on a sound one. In my opinion.
I have looked into ti frame repair as I bought a frame which I though was sound, but after waiting ages to strip, found a crack along the chain stay. An agricultural and not guaranteed to hold repair was £70 ish, a fully guaranteed repair which involved replacing both stays was nearer £400.
Luckily the bike was worth the sum of its parts so I didn't lose out too much aside from the desired build I had in mind.