Even if he did have the nazi markings, as the gun has been refinshed, it's only value is as a shooter, nothing more. Nice looking Luger, though.
Yes, and no. A poorly refinished firearm looses much value, but a quality refinish doesn't hurt it nearly as bad as you would think. Especially with a desireable gun like an early Luger. I don't see a prefix on the SN, so it might even be very early. It looks like a Marine (Navy) model, and if it is, it's even more desirable. If it was original and untouched, it would be worth more. But even mix and match Lugers still sell for 7-800ish, at least the last few times I've seen them at shows. An all matching, early make Marine luger in good shape is valuable, regardless of a refinish.
I would be cautious at this point though. There are so many variants and post-war creations, that getting a definitive identification will mean the difference between a gun worth a few hundred, and one worth thousands. There were a bunch of post war commercial Lugers made, and since I didn't see any dates, swastikas or waffenamts, this is a possibility too. Regardless, this would still be pretty valuable, just not as much as a Nazi or pre-war model.