[Fasterthanyou]

There are a few problems with this senario so I suggest you call a lawyer ASAP. First off, you should never release the title until you have all the money set in stone. NEVER accept a personal check no matter who it is. It could be you're best friend, just don't do it. Have them get a cashiers check which is as good as cash but can only be deposited.
The Magnuson-Moss Warranty Act might help you here. Ask the lawyer and tell him everything that happened.
Private sales usually are not covered by the "implied warranties" of state law. That means a private sale probably will be "as-is" and this is the case in NJ. He can get in SERIOUS trouble for stopping payment. I'd also call a repo man to get YOUR car back. The only problem with that is that you gave him the title and have no contract. This might get messy.
Another option is finding why the car isn't starting so you can avoid the small claims courts and what not. Let this be a lesson to anybody that doesn't feel they need a written contract expressing as-is. And again, NEVER accept personal checks!