Replace the tank! I know it costs money. Your health will improve instead of drinking and bathing and cooking with rust and all the other stuff that results from it.
cut the water off. soak it in rust removal chemicals then wd40
the best way to stop surface rust is to sand the spot of rust off and then spray it with some primer to keep the rust from coming back
You may need to replace it but you can remove it and try CLR and then rinse it really well.
buy another pail
you need to do it again
It depends the level of rust and degradation but yes usually minor rust is available to fix with a liquid which decreases rust and the things associated.
Turn up the mains pressure or replace your water lines if you have galvanised piping, the internal diameter might have been reduced due to rust.
sandblast and paint or weld in new sheetmetal then paint
Take the hose off the water faucet and check the little filter in the hose end. It may be plugged with fine sand or rust.
From what I have seen from commercials, it should fix the hard water problem especially if you use a well. They showed people putting salt into the hot water heaters.
I don't think you are able to fix this rust problem, take you car to your local repair shop or car dealer. They should be able to take care of your problem and fix it for you. Hope I can help.
Try coating the rusted areas with rust converter and repainting wit a suitable paint.