Maybe just a fresh set of rings or reeds? Most of the cast iron compressers are rebuildable. Assuming here the air filter is clean. The filters on the outgoing air are good?
Re the rusty tank, my old 2hp 22gal compressor rusted out. Mostly, it was because I hardly ever drained it. I hardly ever drained it, because it was a pain in the rear to get to the little petcock; it was at the bottom of the tank of course, sandwiched by the the front "foot" on the tank. And, that was where spiders and other things like to hang out...
On my new compressor(got about 5 years ago), I went with a 60gal upright. There was NO WAY I could get to the petcock on this thing /forums/images/graemlins/mad.gif Before even using it, I pulled the petcock out. I used a short piece of pipe in it's place. I put an elbow on it, and another piece of pipe to get to the front of the tank. On that, I put a blow-nozzle.
Now, every time I use it, I push the handle on the blow nozzle with my toe, while I roll the hose up. Presto, tank is drained of water every time it is used.