I see it like this. You are in a no win situation if you want to harp on about the letter of the law.

You are correct: A buyer should not alter an item or modify it or any of that sort of thing if they are seeking to return it. It should be returned in the condition it was received.

However, if an item is faulty and those faults were not disclosed in the ad, then the buyer is entitled to a full refund and the seller should be paying for the return postage, what is more.

So technically, I guess ebay could say the buyer was not eligible to return the item because of the repairs. But on the other hand, if you contact ebay and tell them that not only the battery, but the whole top chassis of the laptop had to be replaced, that sort of proves the buyer's point, doesn't it? That the item was faulty.

What if ebay then gave a full refund to the buyer, but without making them return it? Wouldn't be the first time that sort of thing has happened. (edit: I see it has been returned already, but theoretically...)

You can certainly refuse the return, you can contact ebay help and chat to them, but the danger is ebay doesn't always follow its own policies and you could still find yourself more out of pocket than if you accept a return.

Up to you which way you fall,  but if I were an ebay rep listening to all this, I'd probably push through the refund for the buyer. My reasoning would be-you, the seller, had already confirmed it needed repairs that weren't mentioned in the listing, so the item was not as described. One strike against you. Two, it wasn't as if the item was damaged, it was sent back in better shape than received. That probably only happens in ebay land once in a blue moon. And three, the buyer has already returned it so it is too much rigmarole to try to reverse the process.

If you by chance did fight it and win and the buyer had to pay to get it posted back-what if they then claim some other new fault (which I think a buyer might easily do if they really didn't want it), then you're back to square 1.

You've got it in your little hot hands, just relist the thing, stating the marvellous new parts and warranty it has.