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As you already know, getting rid of rust is a losing battle, once it starts it will spread. Your best bet is to take it to body shop. They will charge an arm-and-aleg, but they will do it right by replacing affected areas with sheet metal and spraying it with rust-proof paint, etc. I have owned several cars in the past with rust, including a 84 Nissan 300ZX, in which the rear floorboard was badly rusted through. I had to live with it, as repairing it myself, and living in Western NY, wasn't worth the sweat!
The car is fine as far as structural integrity. Little rust on you undercarriage is not worth worrying about. A buddy of mine sprays used engine oil on the undercarriage, which is not recommended by the EPA. It does seem to work, as there is no sign of rust.
Cheers,
SM
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90 BMW 325is, 98 BMW 528i, 90 Volvo 240DL
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