Just so I understand this correctly, you want to purchase this property "subject to" the current financing (takeover the payments on the existing $40,000 mortgage) AND have the seller carry a note for the remaining $80,000?
It sounds like a good way to get into a property with no money down, but I can see the seller's concerns. Are you willing or able to put anything down on this property? Coming in with some of your own cash might alleviate the seller's worries that you'll "walk" if things start to go south after you own it.
Also, what is your end goal for this property? Rent it out, flip it, live in it? Make sure the existing payments PLUS the payments to the seller's carry make financial sense.
Good luck on this! Tell us how it goes.