The rust needs to be dealt with. I second the mechanical cleaning options but suggest, in addition that you look for some phosphate based rust converter solution (Naval Jelly is one brand, Oxi Solve another and others are around) and swab out the innards as best you can with this and let it dry. This will convert the rust to iron phosphate, slowing new rust formation enormously, and is a good surface on which to spray the Frame Saver stuff. Since your frame has already rusted it is at high risk for further rusting, so I would spend a bit of effort and $ to preserve it. WD40 is not a good solution for frames in the condition you describe, it works fine in Arizona however. You need to pay attention to the seat and chain stays, hopefully there are access holes at the BB for the chain stay. Seat stays may well be sealed, as likely as is the fork, if steel. The seat tube is the most accessible of the tubes, the top tube difficult or impossible, the down tube, probably from the BB. Head tube is accessible. You will use up most of a day taking down the bike, cleaning and treating, but it will last a few years longer if you do so.
Steve