Good Morning Sreeram,
It sound like you really don't like this home!
I guess let's start with location. Glenview in general has had some pretty high price points over the last few years, and 250K is definitely near the bottom of the market for Glenview. I certainly understand your concern with the proximity close to lake, high traffic, road noise, etc, but it's hard to imagine getting this type of deal without any drawbacks. In fact, there are some 1MIL + Homes on Lake, so I don't feel that the Lake Street Location will really hurt the value of a property at less than 32% of that price. What you're paying for is the community. I think it can be safely said that there will always be a market for affordable, updated homes in highly desirable communities.
As far as the money pit question goes, that is more a question for your Realtor (who is analyzing the homes future marketability) and difficult to determine without much more information. If it is the home I'm thinking of, it's got a great lot size, and has 4 Bedrooms and 2 Full Baths. This is hard to beat at the price your winding up at. The taxes for this property are also a bit high, given the value, but perhaps an appeal may be a way to reduce this number. It has a fairly large lot, which is great for value, and may offset the Lake Ave location.
If you haven't already, I would ask your Realtor what they feel the home would be worth completed, and make sure you have a home inspector detail the work needed. Afterward get a quality General Contractor to get you proposals on the work to make sure your 60 K top end figure is realistic.
Glenview has a great school system, and with your 2.5 year old approaching school age, not a bad choice.
You should also be looking at homes you could buy for 320K that don't need any work to see how they stack up to this one. Remember to factor in the taxes as part of your equation.
FYI, the home I'm looking at on Lake is under contract, so I hope this is you if you want it, and best of luck.