Q: Protection mode is blamed for engine shutting down

When I purchased my car used, naturally the previous owner told me that there was nothing wrong with it. Within an hour of driving after buying it, the engine shut down, steering wheel locked up, and I could not accelerate. When I went back and talked to the previous owner, he said the cause was that the chip on the key had worn down. He started the car and it ran fine. After driving away, for just a few seconds, it shut down again. He then told me the car was in protection mode due to the security system in it. After that we left the matter alone because he said he would make a new key and have a new ignition installed, but that we’re not to put it in yet. Later that day the previous owner knocks on my door saying everything is fine and claims to have started and run it at least 20-30 times without any trouble. An hour later it started okay, I put it in reverse and then when I shifted to Drive, the engine died again!! Even when my friend and I tried to jump-start it, it would not start. The previous owner had told me that if I unlock the car the wrong way that it goes into protection mode and then will not start. So I am thinking the problem is with the security system. Is what he told me legitimate and what will fix this car?