No barspins, first, but after a rainy day out, or a flush down of my bike (after a rainy day) I find water in the chain stays, or at least thats where it pours out of (those little holes).

A, is this normal and B, is my frame going to turn to rust?

The frame is some old steel lugged road frame.

I always assumed that the holes were there so that water could get out.

vent holes are also used in tubes to dissipate heat and moisture and alleviate pressure when brazing, but those particular holes are usually filled with brass after the frame is finished. but yes, those holes are to keep moisture from hanging out too long. i have never heard of water "pouring out" from there, though. might want to see if you can find out where that kind of volume is entering the innards of your frame. one suspect is a lack of grease in your seattube, particularly around the "slot" where the binder bolt clamps it down. this will allow water to seep in as it gets sprayed on by your back wheel. run a fender, or put some grease in there. just a thought.

Yeah, I was wondering where so much water could get in, I will check the seat post area asap, thanks.

I guess I just forgot to grease the post, there was alot of rust stains on the post. I misted a bit of light oil in to the seat tube, hope it dosen't leak in to my sealed BB.

Is there any way to clean a frame inside out other than submerging it in some sort of acid?

you can clean the main tubes with one of those big pipecleaner brushes from a hardware store. as far as the stays and fork blades go i would just let it dry out and fix it so it doesnt get more water in it and not worry about it. it takes a loooooong time for a steel alloy frame to "rot out" or whatever you're concerned with. if it wasnt for ruining your paint you could also VERY GENTLY run a little heat (i.e. a torch) over some of the tubes down by the joints/crevices where moisture would collect. but again, i would just seal everything up with some good thick grease and leave your seatpost out overnight, put it back together later and never worry about it.