That eye is indeed quite funky looking. Almost all eye problems stem from poor water quality, resulting in either a bacterial or fungal infection. Did the fish get the eye problem soon after you acquired it? It's possible that the change in water parameters (pH, hardness etc) from your water supply and the other owner's water was too drastic for the fish. I would test both yours and the past owner's water and compare the results.
If it's not a change with the water, I say when in doubt, do a water change. If my fish start behaving oddly or having problems, I do more water changes until things settle down.
I would address the water issue first, then quarantine the fish in a separate tank, preferably something around 10 gallons. Keep in mind that the quarantine tank has to have its own heater and filter. I've used Tetra Life Guard to cure eye problems in African cichlids, but the fish still lost its sight in the infected eye. He's adapted over time with one eye and still eats and holds his own with the other cichlids.