I found some rust on my LHT, near the eyelets on the rear dropouts where there's a little hole from the manufacturing. What's the best course of action (poor bike is only 8 months old)? Previously I've scrapped it off with a bit of find steel wool and put a little clear nail polish on it. I just bought some frame saver too, cant hurt I guess even if I should have done it 8 months ago. And would it be smart to tape these holes off once I put the framesaver in?

I'd sand the area clean of rust, and wee bit past the paint line (so you get it all) and apply some anti-rust paint from local hardware store.

That's just rusty water draining out. You must have been riding in rain, or hosed it off. Don't use a hose on a bike, you can a. rust it, b. mess up bb bearings. c. mess up r.hub bearings. Clean with wet rag.

Don't block the holes - they let water drain out of seatstays/chainstays.

Treat frame with framesaver. Move it around all angles to fully coat inside of tubes. Wipe off excess that runs out onto painted surfaces before it hardens.

Put some grease on your seatpost (inside seattube). It may cut down on water getting into frame. Cover saddle/seatpost area when parked to prevent water entering frame. Really try to avoid immersing hubs and BB in standing water.

Otherwise don't worry too much. Steel rusts but normally take many years to rust enough that structural integrity is compromised. You'll have either given up riding or be looking for a new bike long before then anyways.

btw your lht is powdercoated, which is tougher than paint - i don't think i'd sand any off just to replace with paint thats not gonna match.

the nail polish is a good idea.