If you want to take a chance, here's a unit that may or may not work but it might help troubleshoot as to whether it is the controller or the compressor...
http://www.ebay.com/itm/MH-YAMAHA-1984-XVZ12-1200-VENTURE-ROYALE-AIR-SUSPENSION-LEVELING-UNIT-/281247362853?pt=Motorcycles_Parts_Accessories&hash=item417ba62f25&vxp=mtr
This one looks better but more money...
http://www.ebay.com/itm/1986-YAMAHA-VENTURE-ROYALE-XVZ1300-AIR-COMPRESSOR-ASSY-WITH-WIRING-HARNESS-/251364666564?pt=Motorcycles_Parts_Accessories&hash=item3a86806cc4&vxp=mtr
Another one...
http://www.ebay.com/itm/1988-88-Yamaha-Venture-XVZ1300-XVZ-1300-Air-Compressor-Suspension-Pump-Actuator-/161217097397?pt=Motorcycles_Parts_Accessories&hash=item258949aeb5&vxp=mtr
The fact that the controller lights up and reads is actually a good sign! Other than the switches needing servicing it may be good. To service the switches disassemble the unit and you will find a rubber pad with round pucks on the bottom where the buttons come down. Clean that pad thoroughly, soap and water is permitted, or rubbing alcohol, just make sure it is thoroughly dry before reassembling. On the PC board you will see what looks like a grid where the pucks make contact when pushed. Take a pencil eraser and polish those grids and then clean with alcohol. That should do it. You can also resolder the edge connector for the main harness at this time.
There is also the possibility that the PO disabled the compressor and converted the suspension to a manual system. Follow the air line from the front forks and see of you find a schrader connector. If you do, use a hand pump to fill the shocks, do NOT use an air line...