My exhaust pipe is pretty beat up and someone told me that since it is stainless it can be polished back into shape. Most stainless steel that I know of will not attract a magnet, but mine does. Is it stainless or not?

Very poorly chrome plated generic exhaust tubing (low carbon). You can get a system made in stainless, but it isn't cheap. How bad is bad? Online wrecking yards should have stock pipe and/or muffler for about 1/2 of o.e.m. new retail, plus shipping.