gaucho777 

Nice bike! I think this is the first touring Palo Alto I've seen. Several forum members have Palo Alto bikes, and every one I've seen shows a high quality of workmanship--yours no exception.

Re the rust: Aluminum foil is good for cleaning chrome, but don't use it near paint. While you have the bike apart, you might consider an oxalic acid bath. (Do a google search for "site:bikeforums.net oxalic acid" and you'll see a bunch of threads on the topic.) Oxalic acid is sold in most hardware stores as wood bleach. I buy Savorgram brand from my local Ace Hardware. I use about 2 tablespoons per gallon (some use less) and soak the frame for about a day or so. Not only will it clear the rust off the chips but will also get rid of any rust that is inside the tubes. You can then either touch up the chips with matching model paint or just clear. One trick is to apply the touch up paint with the end of a toothpick.

Looks like you need shifters, front & rear derailleurs, saddle, brake calipers, cables, housing, tires & tubes, chain and pedals. There are some Jagwire cable kits on ebay from Hong Kong for under $15 including everything you'll need. Might be knock-offs, but they work fine. I'd look for Suntour derailleurs--something like a V-GT, Vx-GT, or ARx model. You'll need a long-cage derailleur to accommodate the triple crankset. SOmetimes you will find "mini-groups" for sales including shifters and both derailleurs. Finding a "donor bike" might be a good way to go. Then sell of or trade the frame and parts you don't need. Piecing together a build part-by-part is often the most expensive way to go about it. Fortunately, with just $150 invested in what you have, you are already ahead of the game. Also check out the sales section here on this forum--usually better deals than ebay.

Again with the Malaysia/Taiwan bashing?