i was just sold an ipad 2, they put it back to factory settings but they never took it off of their account. they claim they dont know the password to their account anymore so now i have a useless ipad. does anyone have advice?

Nonsense. They would still need the password for the account for their own use.

They sold you a stolen iPad. Get your money back.

If the iPad has Activation Lock - that is, it's asking for the previous owner's Apple ID and password to activate the device - then you will need that information, or you'll need to get the previous owner to remove the device from his/her iCloud account:

http://support.apple.com/kb/PH2702

If the previous owner is unable or unwilling to cooperate - and the claim that they "forgot the password" is very fishy given the multiple options available for resetting the password to an Apple ID - then the device is unusable by you. Return the iPad for a refund if you can.

Regards.