You can get a spray can of aircraft paint remover (if they still sell that stuff), spray it and let it eat it off. I used to sell/race Cannondales, and I sprayed the front half of mine, then had it polished. Came out nice. So, you can just eat that paint off, then polish the aluminum underneath and have a shiney new frame. Or get it painted, or whatever you want.
Anyway, looking at the components, that's a low end model. I think your guess for the late 80's is right, however I'm trying to remember when SRAM first came out with the twist shifter. (I remember us hardcore riders didn't like them back then). The good thing about Cannondale is that back then their frames were generic, and the bump up in models was a component upgrade. The stuff on there right now... chromoly fork, low-end gruppo, crap stem... could be trashed to keep just the frame and rebuild the bike to be a decent off-road rider, but you are going to spend a lot of scratch that would probably be better spent in a new off-road ride. I don't know what your plans or goals are, but mountain bikes don't hold a decent value because they get beat to heck and worn out quick, and that new technology makes older models, especially ones 20 years old, obsolete.
Maybe you can do some rat rod project with that aluminum frame?