first and foremost, contact the seller. there are so many people who don't do this, which i really don't understand. just don't be all confrontational about it, at least not initially. just explain that his auction stated the game was in excellent condition, but when you received it the condition is so poor that it won't even work in your system. if he has good feedback, it may have just been a mix up and he may be willing to work it out.
but, since the seller essentially lied, contacting them probably won't accomplish much (though by no means should you skip contacting him). if he doesn't offer an acceptable way to resolve the problem (after some communication, mind you) and you paid with paypal, threaten him with getting paypal to do a chargeback. if he still doesn't budge, leave negative feedback and try to get a chargeback.
if you're stuck with the game, you may be able to at least resurface the disc so it's playable.