What should I look for when buying a bike from an auction?
Just like with any other area of expertise, there is no substitute for years of experience. If you need a simple heuristic though, brand recognition in combination with a general knowledge of groupsets and their quality can go a long way.

At the very least, know how to tell forged components from stamped. Learn Shimano's and Suntour's groupset lineups. Groupsets are generally a good indication for the overall quality of the bike. 

Know about the different qualities of steel (hi10 &lt; 4130 chromoly &lt; branded {reynolds, columbus}). Learn about the qualities of good steel lugs (some framesets are worth money that won't have any parts on them).

Back all this up with a smartphone and you should be good.