I am selling a 1988 truck to someone who wants to fix up & drive. Does it have to pass inspection for title transfer?

Depends on where you live, there are some laws on the books ( I think California) that it has to pass the emission test. ** I am not in California and not 100 percent on that one)

But in most places, you can sell it as long as you are clean on the bill of sell, that it can not currently pass inspection and the buyer signs where they are aware of that.