It's too small for you, you need a 54 by Cannondale sizing (in that era, the serial number begins with the frame size). Other than being the wrong size, however, that bike has seen very little use. Freewheel rust means nothing, they were unprotected steel and rust very easily. More telling is the condition of the crankset, derailleurs and brake calipers, all of them are in good shape. As others have said, would need a complete tear down of the hubs, BB and headset because the grease is old and dried out and riding it that way would cause irreparable damage. Your clue there is the original cable housing and cables.
Now that you know what to look for, go out and find one that fits.
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