I'm of the belief that this forum exists to discuss legal issues related to the hobby, not the purchase of used boats. Nevertheless, I'll offer a few comments.
The OP's first mistake was buying a used boat 'as is' but not getting it checked out by a professional. Instead, she believed the blather of the seller, not a prudent approach to buying an expensive item.
The OP's second mistake was posting on a SHMB rather than getting the advice of a competent attorney, although $5,000 is at stake.
The OP can file a claim in small claims court to attempt to get her money back. Filing a claim is simple and the procedures in small claims court are streamlined for non-lawyers. The following is a good reading on small claims court by my old DTPA professor in law school:
"How to Sue in Small Claims Court," by Professor Richard M. Alderman, 'The People's Lawyer'
The issue of the title isn't relevant at this point because the OP doesn't want clear title to the boat -- rather, she wants her money back. However, if the title WAS at issue, the OP could claim she was a
bona fide purchaser for value without notice. This doctrine protects innocent buyers from third-party claims of title-holders.