Looks alot like my '86-ish Mongoose ATB, which I'm building into a commuter/tourer. Those old ATB frames were basically beefy road frames with relaxed geometry. I'd suggest that you:
1. Take it apart, clean it up and inspect it for structurally significant rust (looks OK in the pics). Buy some LPS 3 rust preventative at Ace Hardware (cheaper than FrameSaver - 1 can will do 4-5 frames) and treat all the frame and fork internals.
2. The headset and bottom bracket races/spindles/cups/bearings might be rust-ruined. That just gives you an excuse to replace them with new cartridge bearing parts.
3. Find a good set of rim-brake only mtb wheels on your local CL for cheap. Lotsa folks are upgrading to disc brake wheels, so these are commonly available.
4. Put some skinny 26" slick (or nearly slick) tires on it.
5. Put drop bars on it, maybe some "offroad" drop bars like On One Midges, WTB Mountain Drops or Origin 8 Garys.
6. Ride it like you stole it (which you practically did - I had to pay a whopping $5 for mine!).
7. Have fun.
8. Eat your greens, stay in school, drink your milk, and call your mom at least once a week.

Cheers,

tcpasley

Reduce, Reuse, Recycle