A frame could be worn out. The thing that will cause the frame to be no longer good is cracks from a life of stress. Look for cracks at junctions. Around the bottom bracket, at the junctions with the head tube, around the seat tube. While you are at it be sure that the ears on the seat post clamp are in proper shape. Also check that there is no crack radiating from the seat clamp slot.

Rust and missing paint, is usually not an issue unless the rust has progressed to a degree where the steel has become thinner.

Even with the Superb derailleur and Dura Ace hubs, I would have a hard time spending $100 on it. Perhaps you can offer less, and see where it goes. To me it sounds like a few good parts and a frame painting project. And even the few good parts may be worn.