stuck with canadian car in the US

Hope someone can help. I recently bought a car from a canadian in Maine. He drove the car across the border to make the trip shorter. We both went into the Maine DMV, they said everything was good, I drove the car to NY, the DMV there took the canadian reg/title and gave me a 10 day inspection sticker.

Come to find out that the car is canadian made, can not be in the US and can not be registered or titled.

I do not have a US tile or a canadian title.

Can I get the car back to Canada, register it in my name and drive it back across the border with a US license?

the original owner that you bought it from should have officially imported it in order to be able to title it in the US.

Here's lots of info on how to do that in the Canadians in US forum
Bringing a Canadian Car over to the USA

I guess my second question is. What does a Canadian owner have to do before he can sell the car in the USA to an American? Can a Canadian resident just drive across the border , hand over the title and take the cash and the plates and go back over the border?

not legally no, they would have to first properly import the vehicle to the US, and THEN they could sell it.

they would actually be exporting the car from Canada.

Has anyone ever sold a car to an American. A car that they owed, registered in Canada, drove it over the border and sold it?

It's explained in that thread Reba linked to, which is why people generally use dealers in this situation. Because it's being imported for a commercial reason, i.e. for resale, then it may be subject to duty depending on where it was made and there will be Maine sales tax on top.

Once they've gotten the title, then they could sell it to you.