Get some rust convertor or etch primer (same thing) and prime the rusty areas after removing free rust. Paint afterwords with good automotive enamel -- spray cans will work fine for this, you won't need to match color too closely.

For the repair, I would suggest welding in a piece of sheet metal if you can, if not, get a fiberglass repair kit and build up to the orignal contours if you can. Last choice would be foam or caulking, as they are not rigid enough to fix the problem premanently.

You will have better luck with the fiberglass from the inside if you can reach the appropriate area without taking the car apart.

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!