Originally Posted by SparkPlug

I wouldn't be certain about 'start of the issue' or drilling the crank. Perhaps think about hoe the water got in there in the first place. In my mind you have just two possible sources. Through the seat post or through the 'cups'. I'm used to cups but given this is a sealed unit they no longer are and off the top of my head I cannot think of the correct term. I suppose the headset might qualify as a possible.

Looking at your picture the major corrosion is on the threads which kind of implies that is where the water has, over time, got in and then it might have filmed over the centre section of the unit. Check inside your bottom bracket to see how far the corrosion extends. If it is by and large restricted to the threads then that would suggest the ingress has been via the cups.

Given you have the assembly out of the way then there is of course the opportunity to spray some gunk up the tubes. Otherwise as suggested clean up the threads as best you can both on the 'cups' and the bottom bracket. Perhaps one of those green kitchen scourers or wire wool with some Autosol metal polish. Paint some Kurust on the sets of threads and then reinsert the cups with a coating of Autosol and screw them in and out until they are moving freely and then clean the gunk out.

On final reassembly, and others might differ, use Copper Loaded grease to lubricate and prevent subsequent ingress of water. As I suggest it looks very much like that is where the water has got in. Either the original grease went past its live by date or someone forgot to put it in in the first place. Beyond that, and perhaps something else, the only remaining concern might be that having removed the rust the threads might not be as close fitting as they were originally. Again the grease will help in that respect.