I actually had a similar problem on my 240D. I am not sure what other products are out there, but my brother and I worked on stopping the rust from spreading anymore. I recommend the POR 15 starter kit. It's got everything you need and it's pretty cheap. I got it through iPd in Portland, or it's online here...
http://www.ipdusa.com/product.asp?strParents=&CAT_ID=0&P_ID=1995&strPageHistory=search&numSearchStartRecord=1
I'm not sure where else it is available, or if there is a similar product out there. it's pretty good at stopping the rust and repairing it to an extent. Hope this helps.
Nicolette