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really, a combination of all of the above. Here is what I would do.
1. Have the partner produce receipts for everything they are claiming they put into the business. This is a must. If they are unable to do so, then it doesn't count.
2. Decide which costs they contend they put in are actually requirments for the business. In other words, gas, lunch, lap top for home, etc. don't count.
3. Have an accountant go over the receipts as well as the business records to show a true split of assets and worth. You will probably need to get an outside accountant that isn't associated with either of you so there is no bias.
4. If it seems that there is cash flow to operate the business without you having to sadle yourselves with debt that cant be covered by the business, then you have a tough decision to make. You may have to cut your losses if not. If there is, then you can buy them out and move forward.
5. Have an attorney draft a buy out agreement that includes all the pertinent stuff like no compete, etc. and move forward. Otherwise, have them draft a dissolution agreement.
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