My uncle a former Vietnam vet have me his 1986 challenger bass boat that has been setting in his yard for over 5 years. Before he parked the boat he had the motor completely rebuilt. The motor runs great and the boat hops up pad super quick. My biggest concern is how to restore the paint.

It depends on the damage.  If the boat has been subjected to the elements, the sun being the worst of them, the horizontal surfaces on the rails may be beyond repair.  The sides and bottom are not likely to be as bad.

 

You can try buffing the gel coat.  Get a good buffer (buy or borrow) and start with a fairly mild buffing compound.  It looks like you'll need a more aggressive compound on the rails.

 

Start buffing, using a light pressure.  If it has a metalflake finish, you can only buff so much before you get into the metalflake.  At that point, there is no saving the finish.

 

Having the gelcoat redone will probably cost more than the rig is worth.  If that's the case, you're likely better off sanding and cleaning the surface, then applying a coat of automotive paint.  You could use Awlgrip or a similar marine finish, but they are extremely expensive.

 

You are dealing with a boat that is about thirty years old.  A coat of spar urethane marine varnish, available at Home Depot or Lowes might be your best bet.  Lightly sand the hull and topsides and brush on a couple of coats of the varnish.  If available, use a semi-gloss or satin finish.  The glossy finish will only exaggerate any imperfections.

 

The spar varnish contains ultraviolet inhibitors, preventing or reducing further damage.  This might be your best bet.  You'll save some big bucks which you can put into new electronics or put it in a savings account toward your next boat.

 

What you want, either way is a finish that is easy to keep clean.

 

The slickest finish will not bring you one more fish across the rails. 

Perhaps sand it smooth and look into a vinyl wrap?

I was thinking wrap too.

wet sand and buff with pro-tec products. it works miracles