To me that looks like the Unibody rail, Probably caused by someone jacking up the car in the wrong spot, causing a kink in the metal and causeing water to pool and rust.

As a fellow canadian who knows what we have to go through with rust cars, I feel your pain.

It does not look good, but the car can be saved for a few years, but generally speaking rust like that is terminal. But you can have a few good years, then you have a good parts car for a southern body.

Several of my cars are now southern cars because i got tired of having to weld up areas like that. My very first benz 83 300SD was like that and to far gone to save so i just swapped the motor and trans into a 85 SEL,

If you can weld, you can save it for a while, if not, and you dont have a friend who can do it, you might be in trouble, because lots off shops around here wont attempt to weld unibody frames like that.

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1984 Euro 300SDC, (4spd standard)
1986 Toyota Landcruiser Diesel HJ60 5spd X2

Gone but not forgotten (some sold, some stripped)
1983 300 SD, 1985 300 SD, 1983 240D, 1986 300 SDL, 1985 300 SDL, 1983 300 D, 1984 300 D, 1985 300SD, 1987 300 SDL, 1983 300 SD, 1985 300 TD Euro, 1983 380SEC, 1990 300 D, 1987 300D, 1982 300D, 1982 300D, 1994 E420, 1987 300 TD, 1987 300 D, 1984 300 D