I understand the boss' reasoning, I just don't like his excuse. It's hard for us to walk away from a challenge like that.

It's a toss up really. Maybe if the code had used some modules then the bugs in the modules would have been maintained by someone else and you wouldn't have to fix those bugs as they're discovered in your reinvented wheel.

I'll agree that a complete rewrite is probably overkill though. I think you could satisfy your desire to fix it by refining the old code by rewriting it one block/function/method at a time. I'm sure it will prove just a challenging and maybe more rewarding to be able to show a before and after.