Fixer Upper Bike, Help Wanted

Give yourself an afternoon to work on the bike (I recently refurbished an old bike for my friend's girlfriend's son that had been neglected in a barn or garage for something like 25 years).

It probably will need a new chain (I think I see some rust spots) and cables at least.  It's hard to tell from the pictures whether there is rust elsewhere, or how the sprockets are on the chainring (where the pedals are) or cassette (rear wheel).  If you know someone with a repair stand, borrow the stand (and the friend, since most people who buy a repair stand know how to use it). There are a couple of tools you need. Chain breaker, maybe a cable cutter/crimper; the rest of the tools are more "normal" - metric allen wrenches and some adjustable wrenches will go a long way. Also, get some bike grease and chain lube. You might also want to invest in a bike repair book  There are a couple of them out there.  I have an older version of Bicycling Magazine's, but I also like Zinn's. Both are available in bookstores. First, clean off the rust spots with fine steel wool.  Then, if possible, get the bike on a stand. If you don't have access to a stand, you can use a hitch mount that holds the bike on the top tube.  If you don't have that either, work near a tree or a wall. In overview, you will want to remove and regrease the head set and fork, then the seat post.  If you have access to more tools, ideally you will remove the pedals and crank arms to repack and grease the bottom bracket.  Also you want to repack the bearings in the cassette, but if it's older than 1985, it will be hard to find the correct removal tools easily outside of a shop. If the cassette spins easily, then you are probably OK without doing this. Replace the chain using the old chain as a guide for how many links to remove (there are more technical ways to do this, but unless you are replacing the cassette or chainring, no real need to do them). Replace the cables. Don't put new crimp on's on until you have spun through all gearing combinations and are satisfied with the adjustment.  You will probably have to adjust the deraileurs both at the limit adjusting screws and with some barrel adjustments as well. It might also need new brake pads. Take the wheels off (they might also need to be re-trued) to make this job easier.  When you replace the brake cables, maek sure you adjust the fit to your liking before trimming the ends. You might or might not need to replace the cable housing during this step.  At the very lest, blow some tri-flow or wd-40 through to see if there is rust or other problems in the old housing.  If the handlebar tape is worn or cracked, you may want to re-wrap them as well. Check the tires for dry rot or problems with the inner tubes.  Put the wheels back on, and give it a quick test spin, running through the gears and brakes. You will probably also need to adjust the seat height during this process to optimize fit.

Or take $50 and a six pack to your LBS, and ask if you can hang around while they do all this the first time. 

ETA - I totally missed the missing derailleur in the rear.  I just thought the chain was off the cogs.  Anyway, if you undertake this, it should seen as a labor of love, or a way to learn about bike building and maintainance on a bike that you can't really ruin...

    Thanks for all the info guys.  The more I look at the price of new bikes the more I'm thinking it might be worth fixing this one.

    As far as size goes, this was my Dad's bike years ago, he is built just like me except he's around 6'5" and I'm slightly less than that so I imagine it would fit me well.

  It looks to me like I can get it where I want it to be with new all cables, a "derailer", some brake pads, tires, and lots of grease and and cleaning.  The parts still on it all seem like they'd be good with a little grease and tune up. 

    Does the derailer in the link below look like it would fit this bike, and if so does mine take the claw or frame mount, close-up picture added for reference

http://www.sheldonbrown.com/harris/french.html#pedals

Can be a fun project with lots o' learning. 

Walmart and the big-box sporting goods stores often have 27x1.25 tires and tubes (no, they're not the best). 
Not sure if Peugeot's use a weird size tire or not, but the tubes have a schrader valve rather than a presta valve.   
You can also find a replacement chain there. 

Does the school have a cycling group?  If so, they'll be your best source for hands-on guidance. 
Take it to one or more local shops, and ask them to work with you.  They can find inexpensive chain/derailleurs. 

Cup and cone bearings aren't too mysterious, but you do need to pay attention to what you're doing.  If your dad isn't too sentimental about it,
you can take it apart to inspect bearing races, etc.  Good learning even if you discard the results.  (Buy a $4 tube of bike lube and see if you can get them cleaned
and reassembled even if you ultimately discard the frame. )

Keep in mind that this bike may have french components (french threads on the freewheel, french sizing on the bottom bracket and head tube)

Whether you ride this bike, or get something else, GET A HELMET AND WEAR IT. 

My .02, turn the bike into a single-speed, I think I saw a kit on nashbar for like $20.00, train it during the winter and keep an eye for an used bike on

craigslist.org or ebay.com for something newer.

Just my opinion on what I would do on the bike

With all due respect to the previous posters on this thread, a lot of what you're hearing is either overly pessimistic, or just plain wrong (that bike doesn't have a cassette, for example).  Annabanana has given the best advice yet, and if you were around here you could bring it by and I'd have almost everything you need.    I have several old steel road bikes, both fixed gear and derailleur equipped.  The parts are cheap, and still pretty readily available.

That Peugeot is a pretty cool bike, and with some creative scrounging and minimal cash outlay, can make a decent road bike (yes, with multiple gears and everything).  First things first: bookmark www.nashbar.com or just google the parts and look for cheap internet sources.  You can ask for advice on the Classic & Vintage forum at www.bikeforums.net also.

Now down to specifics: that Peugeot will take a derailleur with a claw since it doesn't have a derailleur hanger. 

http://www.jensonusa.com/store/product/RD300A00-Shimano+Tourney+Rd-Tx31+Rear+Derailleur.aspx

Here's one for $10 new or PM me with your address and I'll send you a used one for free.  Chain: "6-7-8" chain.

http://www.jensonusa.com/store/product/CH409A03-Kmc+Z-51+Hg++Ig+Compatible+Chain.aspx

$10 again, or get locally at Walmart.

Tires: 27" tires are readily available as cheaply as $6-10 online.  I like the Panaracer Paselas or there are lots of cheap Kenda tires available that will serve just fine -- Walmart again.

Derailleur, tires, and chain are the things that bike pretty much has to have.  Everything else, even cables, can stay, if they're not rusted.  The bike looks relatively clean so they may be fine.  Spray WD-40 down them, read www.sheldonbrown.com for advice on how to install and adjust everything, and ride it!  If you're going to be an engineer, this should be right up your alley.