Welding a new tube to the banjo fitting might not be a wise idea, unless you have access to a top-notch machine shop too. You see, the mating surfaces, top and bottom, of the fitting are probably machined perfectly flat AFTER the tube is pressed or welded in place. In the process of drilling out the old tube and welding on a new one, close to, or directly into the banjo fitting, the heat would distort or bend the fitting. You would then have to machine the top (bolt head side) and bottom (turbo housing side) of the fitting flat again. And, there would be a limit on how much warpage or bend you could machine out, because, at some point, you would be changing the alignment between the fitting and the holes on the banjo bolt itself.

Local pick-n-pull or a new one from Volvo seems like the best idea. If you go to the local p-n-p, take a flashlight along and take a careful look inside the fitting you get BEFORE you put down your money. Make sure that it is free of rust of any kind, inside or out. Get and use new washers from Volvo to install it on your car.

And, BTW, if the rust is on the inside of your tube, there is, or was, a problem in your cooling system. There should be absolutely no corrosion inside the cooling system. Check all of your other steel tubes and hoses for signs of lurking problems, and flush and change your coolant. Use the Volvo stuff. Yes, it is $31 per gallon, and you will need 2 gallons of it, but it is the best for our cars.

If you have a good, accurate voltmeter, put it in DC voltage mode, clamp or otherwise attach the negative probe to a good ground, then stick the positive probe in your coolant tank, in contact with the coolant in there. Volvo says that there should be less than 0.9V. If there is more, then it is time to change the coolant. Other authorities actually say that there should be less than 0.1V between the coolant and ground. I get nervous at about 0.3V. The voltage indicates that the different metals in the coolant and the coolant itself are acting like a big wet-cell battery and that there is galvanic corrosion going on. This means that the coolant's anti-corrosion additives are breaking down and allowing your engine to eat itself up from the inside out.
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Scott Cook - 1991 745T, 1985 RX-7 GSL-SE, 1986 Toyota Tercel (Don't laugh, it is reliable, faithful AND gets 41 mpg!)