That's a a low-end bike at best, don't expect too much from it either way. Still, the pedals shouldn't have broken off - that's bad.
Surface rust on chain and freewheel is pretty much an aesthetic issue. Check that you haven't got any frozen links, then oil it to to stop the rust progressing.
"Random noises", as you describe it, can be anything. Shifter cables tend to settle a bit, so you might need to do a little bit of tuning. Or there are a couple of stiff links causing chain chatter.
If you're able to ride with the saddle at that angle, w/o immediate discomfort, I'd say that your saddle is set too low.