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No, not really a black sheep year. '97 was the bump up year to the body style you see now ('02 was the next gen that still looks somewhat the same). Also in late '98, the engine was bumped up to the current 955i from the 885i.
Things to look for? I'd say make sure the service intervals were performed (valve adjustments, oil change, etc), check the front fork seals for leaks. Leaky seals mean the guy couldn't keep the front tire on the ground and when he it did touch the ground, it was not a gentle landing. Other than that, you shouldn't have too many worries. The S3 is a great bike.
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