Hi abbydmd and welcome. Normally you just unscrew the nut all the way and take it and the collet out of the arbor. However, I'm not familiar with that specific router and Sears sold one that was made by Ryobi that had the end of the armature machined to squeeze the bits tight when the nut was tightened. In other words it didn't really have a collet. I'm sure this was a cost cutting measure but the downside of that is when the socket in the end of the arbor wears out and won't hold a bit anymore you either need to either replace the armature or throw it away. I got handed down a router like that from my father in law and it is only a clumsy paperweight now. I'm always on the lookout for some job or jig that needs a high speed motor to drive it with and that I can adapt the router to.
Just so you know, you can post pictures as long as they are in your hard drive. Use the Advanced posting method and look for the Manage Attachments button. You may be right about why the person was selling it.
Someone I consider a master woodworker once told me that a master woodworker is not someone who never makes mistakes. He is someone who is able to cover them up so that no one can tell.