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I would probably inspect the car before knowing where the damage was and if I couldn't spot it, then find out where it was, and inspect again. if I still couldn't see it (always in sunlight), I would accept it.
If I saw it in the first look, I would get them to do it again. If I saw it after I was told where it is... I suppose it depends how hard I had to look.
As for the damage being on record, not sure, but I doubt it.
As for what the dealer responsibilities are, I would presume the law says something like "as new", and there may be a point at which you cannot refuse if the dealer has done all they can.
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