the "mirror" cover on top of the glass had chipped away all over,
giving the result of a patchy look.
Optics can take a huge amount of damage (chipping, scratching) before it really starts to affect performance. You'll be surprised at the amount of abuse a telescope can take like that. As long as it's not properly cracked in two, don't lose any sleep over it.
The stars just move like a liquid in the center
The moving around is normal. It is due to atmospheric turbulence, which happens all the time. Unless you're in a vacuum, the images will always shimmer a little. Sometimes they will shimmer a lot. Other times not so much.
In astronomy we have a word for this - it's called seeing:
http://en.wikipedia.org/wiki/Astronomical_seeing
Also, as the scope is a reflector it has the "three lines" on the
front, however this interferes with the object I am looking at as i
can see the lines on the star.
You are way, WAY, WAY out of focus. The scope might also be completely miscollimated. The star must not appear like a big blob, with the "lines" and the image of the secondary mirror visible in the middle, like in your photo.
The "lines" are called spider vanes - they are parts of the assembly called spider, which holds the secondary mirror in place. The vanes, or the secondary mirror itself, must never be visible in the image.
First, do a rough, purely visual collimation. Do this in a place with plenty of light (inside the house). Take out the eyepiece. Look into the focuser. You'll see the secondary mirror. Reflected in it, you'll see the primary mirror from the bottom of the tube. Reflected again in the primary, you'll see the focuser, with your eye in the middle.
If things are more or less centered, like in the third diagram above, leave it alone. If they are way out of center, like in the first diagram, use the adjustment screws on the mirrors and center everything. Collimation is very important to performance. A miscollimated scope will perform miserably. This is FAR more important than all the scratches on the mirror.
Again, this is purely visual, no-tools collimation. This is all you need for now. You can get a laser collimator later, after all your problems are solved. This is the article where I copied that image from, if you need more info:
http://www.skyandtelescope.com/astronomy-resources/how-to-collimate-your-newtonian-reflector/
Also see this document:
http://www.etnaastros.com/documents/No_Tools_Collimation.pdf
Once collimation is done, you need to find true focus. Go outside at night. Point the scope at a medium-bright star. Polaris, if you can find it, is great because it doesn't move.
Now moving the focuser back and forth, try and determine which way you can make the image of the star appear smaller. Now keep adjusting the focuser until the image of the star is super tiny, then it starts to grow again. Then back off until you make it as tiny as possible. That's when it's in perfect focus.
Now point the scope at a very bright star. If your scope has 3 spider vanes on the secondary mirror, you may see 6 spikes coming out of the star. Like this:
If your scope has 4 vanes, then you should see 4 spikes, like this (it's really 8 spikes, 2 times the number of vanes, but in this case they are superimposed 2 by 2):
The diffraction spikes are easily visible on very bright stars. On medium-size and small stars, they are not easily visible, or not visible at all. This is normal.
Unless the stars are super-tiny dots like in the images above, your scope is not ready for use. Do your best to collimate it and find true focus. Make the stars super-tiny.
Good luck and let me know if you need more advice. It would help a lot if you could find an experienced astronomer nearby to help you fix the scope.
