Storing the bike indoors may have been a contributing factor, but I doubt that it played a major role in your troubles. I would guess that water was thrown up from the rear wheel and entered the rear-facing slit of the seat collar, and was drawn down the seat tube. This type of water infiltration can generally be prevented by filling the slit with grease when you grease the seatpost.
It's a bit tough to tell from the picture, but the corrosion within the frame doesn't look like it will compromise the strength of the frame. It just looks like slight surface corrosion. It can likely be cleaned up with a rag and a wire coat hanger. Just cut and straighten the coat hanger, form a loop in one end, and then securely knot a small rag through though the loop of the coat hanger.
Some WD40 will help things along and allow the dislodged particles to stick to the rag for removal. Don't go crazy with the WD40, or you may thin the grease in your bottom bracket bearings.