That frame might be a little older than you think.

If you want to keep the current look with a few concessions, I would start with a rust convertor. Most hardware stores will have this as in spray can or possibly brush on liquid. It converts the rust into an inert patina in preparation for painting. If you can get the convertor in a can, you might want to get it inside the tubes as well. The final color of the rust will be a very dark brown. Too thick of a clear coat makes the bad paint and rust look plasticy and usually awful. Don't use anything from the hardware store. Unless you can get a professional clear coat done, I would just use a paste wax.

Others will know more about the bottom bracket, but I would just start pulling it apart, carefully. You will also need to straighten out the fork tips and "track" ends.

Have fun with it.