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Emissions Tech sounds like he is confused, no 1ZZ-FE Corolla/Prism use an EGR anymore, due to improved fuel injection, combustion chamber design, and valve overlap. He cannot "fail" the car for not having an EGR, as the car never came with one to start with.
Personally, this car sounds like a money pit - there are plenty of other decent condition cars out there. If I was in your shoes, I'd pass on this car and keep looking.
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2002 Corolla S, 1.8L 1ZZ-FE VVT-i
2003 Matrix XRS, 1.8L 2ZZ-GE, VVTL-i (RIP)
2009 Matrix XRS, 2.4L 2AZ-FE VVT-i
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