Lots of manufacturers used M16 parts to assemble AR lowers back in the day. Its entirely possible that the owner bought the gun and it came to him like that.
I hope you didn't trash the parts. All you would have had to do was to grind the catch off of the hammer, grind the tail off of the disconnector and simply re installed them back into the gun to make them legal. It used to be that AR parts were simply modified M-16 parts and the grind lines were clearly visible.