You generally don't want to even mention the fact that you may have purchased your car from a team member, even if you did. Produce a bill of sale, make no mention of who the seller is. "Some dude on Craigslist sold it to us."
Regardless of the condition of your Focus, I think a 2000 is probably far too new to pass through Lemons judging without a great deal of scrutiny and harassment. It would have to be completely and unquestionably bone stock and beat up. Even then, it would get a close look and possibly penalty laps if your documentation isn't up tight.
Remember, if you pay a verifiable $500 for a car that doesn't have anything good on it for you to sell, you have ZERO budget to put into replacing belts and hoses or anything else that doesn't fall into the "safety" category. And if your buddy who sold it to you just replaced the plug wires and they look new... even though they really were "on the car when you bought it"... I wouldn't want to be you. I've seen a lot of poor saps go through judging with such stories. Even if they're true, the judges NEVER believe it.
You'd be better off fixing the windows on the Focus, putting a radio in it, cleaning it up a little and selling it for $1500 on CL. Then buy something more LeMons-appropriate for $200 and having a little money left over to buy safety equipement.
Lemons South 2008 - Fail, Lemons South Spring 2009 - Fail, Lemons Detroit(ish) 2008 - Fail, Lemons South Fall 2009 - Fail, Lamest Day 2009 - Fail, Miami 2010 (Chump) - 2nd!, Sebring 2010 (Chump) - Fail, Cuba 2010 - Crew Chief, Roebling 2011 (Chump) - 8th!, Sebring 2011(Chump) - 19th!