1) The plane of the wall is broken (one part is shiftin away from the other)
2) The crack exceeds 3/8 inch in width
3) There is water penetration.
4) There are signs of bowing or other stress-related issues.
Horizontal cracks are almost universally bad news.
There are a lot of variables that we dont know here (type of foundation, materials, age of home, method of repair, etc) so I can't tell you about whether this is or is not an appropriate way to handle it.
When in doubt - call in a structural expert (engineer). If you wish to bakc out, contact your agent (and possibly and attorney).
Happy Home Buying!