Get the stem and seatpost free before you bother touching anything else.

As much as I dislike repaints that might be the best option here. The rust is unfortunate. *Edit: another option is to clean up what rust you can (wire wheel?) and just paint on some POR 15 and ride it until it breaks. Bike frames can be shockingly rusty before it becomes a structural issue. This bike is almost certainly not worth the cost and effort of a full restoration/repaint, new decals, etc. Especially since the fork is chromed.