Given all the rust it seems that this bike is either out in the elements all the time, it sees a lot of salt, it rarely gets servicing or all three. Know that chain life is significantly reduced when running it with an abrasive coating it (as in iron oxide).

The pads look pretty work and dried out. When was the last time they were replaced? Maybe placing the thicker concave spacer between the pad and canti arm will bring the arm angle out to come closer to a right angle with the straddle cable when the pads contact the rim.

Since brakes are simple levers comparing canti arm lengths and the angle the straddle cable sits at (when pads touch the rim) is an easy thing to do. See included diagram for specs. Andy