That is a nice little lathe.
I was thinking scotchbrite to remove the rust on way
the rust is a ferrous oxide which is physically proud of the parent metal. If you use scotchbrite you may end up scratching the surrounding, good metal of the way.
You might consider using a chemical process that just removes the oxide. One product that has worked really well is Evaporust (not affiliated). It “dissolves” just the ferrous oxide and does not touch the good metal. Follow instructions on label. I would soak a cloth in it and place it over the rust. Keep moist by covering with some plastic (or just drizzle more Evaporust occasionally). Depending how deep the rust is, it will dissolve in 15min to sometimes overnight. Not your case as it looks not bad. You can even just rub it with the wet cloth. You will get a black “sludge” as the rust is converted. Rinse with warm, soapy water. Dry. Immediately use a light oil to prevent (almost instant) flash rusting - I just spray it with WD40. You will have microscopic pitting where the rust was - it is only cosmetic and since it is below the way surface, you will have full functionality of your lathe. Just stone off any high spots after and coat in way oil.
the dial is a little worse. Remove and place in a container, FULLY covering the parts in Evaporust (you will get a black “waterline” on the part if you have it only partway submerged) Scrub once in a while to speed up the process or just leave sit overnight. They will be black when you take them out; soapy water with a scrubbing brush will take that off. Repeat if not all oxide is gone. It should preserve any graduations on the dials.
Maybe try it on some rusty metal to gain experience with the stuff first. Then do your lathe parts.
PA for sure, maybe CT, Lowes, HomeDepot sell it.
