dude, what a filthy mess! start by taking the derailleur off and cleaning it up. i'd just drop it into a coffee can full of solvent like mineral spirits. or you can clean it by hand with a toothbrush and wd-40. take all the screws and bits off, clean rust with naval jelly if you have to and reassemble with a lubricant like parks lube. when it's all put back together, use a spray oil like tri-flo on the moving pieces and spring. while you have it off the frame, clean up the bb shell area and seat tube. reassemble on the bike using a lube between the frame and clamp. polish out any road rash with auto quality sandpaper. visit sheldon on replacement of the derailleur. it should be only a couple millimeters above the big chainring. the crank arm should clear through its revolution, and the chain should not interfere. if it's not bent, don't bend it, but use clamp placement to adjust. it's ofen a trial and error approach. hope you bought new cable as well...