First off, I'm certainly not against you OP, I had similar problems when I was young. If this had happened to me, I would have gone directly to the DMV and filled out the required paperwork, even if it's three months late. (BTW, I would still consider this because that car may have been used in a crime (Sorry to worry you)).
I would then have sent a registered letter to the tow yard telling them that I sold the car. I would give the name, address, date, etc. and tell them if they contacted me again I would turn it over to my lawyer. This is how an old guy would do it and it seems to work for me, lol.
At this juncture, I would place a lean on the car and then give the buyer the right to pay the lean on the car and get it back. I would be very, very nice to him and leave it up to him. Please note he can come with the police and get the car any time he wants, because it is his car. You could always take him to small claims court (which I would mention that I was going to do if he takes the car using the law) and maybe win the yard fees back.
I'm sorry you are going through all of this, but these are the things that make you smarter in the end.