request for general advice on cars

So I'm approaching a point at which I would like to make a decision about getting a car or not. Factors effecting the decision: Unseelie is getting rid of his, and can probably join city carshare, but aside from that we'd be without a car between the two of us, which could suck; I can't join city carshare or I'd just do that. But having a car will increase my expenses by ~$140/month, making it a lot tighter to squeeze by on my current 20K salary.

IF I get a car, there are four ways for me to do it:
(1) Take unseelie's car, even though its damaged goods, and just keep on repairing it as it dies a piece at a time
(2) Buy something off of craigslist at what seems like a good price, but only if a garage checks it out and I'm ok with the level of repairs they say it requires
(3) Buy something at a police car auction
(4) Buy a used car through a reputable dealer, insured, refurbished, etc. This is by far the most expensive option, but may be worth it.

My budget is between 2 and 4K. Private party, I can theoretically get a 1990 era Honda Hatchback for around 2K. Dealer, I can theoretically get a similar, possibly slightly older era for around 4K.

Does anyone have any positive or negative thoughts on these options?