Hi, J,
Odor doesn't effect sound. However, a really bad smell is something else. If you really like the guitar, the smell could be a huge barganing tool for its purchase. Here's what I'd do. Bring a bright led flashlight to the vendor and look inside the f-holes. If there is mold, it is an issue that many buyers would not tolerate. Make your best deal based on this fact(if you still want it) and use it as a strong barganing tool. However, if it is not moldy, then the suspect could be the case(as others have mentioned) but also the fact that wood is porous and absorbs moisture, smells, dust, etc. in which case I would used compressed air to blow out the inside of the guitar and allow it to sit uncased in a moisture correct room on a stand for a week or two. You might be pleasantly surprised. However, the sound of the instrument, not its vintage, should be the reason for your purchase ---unless you're a collector.
Finally, I tell you a true story. I am friends with a very respected American Luthier who told me he bought some outstanding cedar many years ago from South America. When he started building with the wood, he noticed a very noxious smell which he couldn't identify. After finishing several guitars that had outstanding tone and beauty, he offered them for sale. Since he always had a waiting list for his Artist models, he sold them quickly. However, shortly after the purchase, the buyers would call to mention the strange smell when they first opened the case which would dissipate during playing--yet always was there. So, he called his vendor and told him about his problem and asked what the smell might be. The vendor replied, "Monkey piss" . . . you bought wood from South America, you know! Good playing . . . Marinero