Oh yes. I've never really thought about this problem before until I propped my bike up and watched some dirty water puddle onto the ground.
I just bought this bike less than a month ago - a Schwinn Madison - but have been riding it extensively ever since. I commute between college and work every day, so it's definitely getting regular use. The crappy weather just kicked in (Bend, OR) recently: the first snow fell yesterday and it's been raining quite a bit as of late. Anyway, on to the technicals.
After a little inspection I noticed some vent holes in the rear of the chainstays. I didn't look too much further, as that's where the water was coming out of, but I assume that that's where the water was entering. I assume that the rain could easily slope down either the chain or seatstays and leak into those holes, but there could obviously be some other entry point.
I'm wondering how big of a deal this is. I did some reading online and came across two different viewpoints. 1: steel frames rust internally and must be protected somehow (e.g. coat the inner frame / plug the vent holes). 2: rusting isn't as common as they say. They just want you to buy their crap.
What do you guys think? Do you have any experience with steel frames rusting?