Remove the rust from the corner bead with 120-grit sand paper. Sand vertically along the corner bead by hand, paying special attention to the deepest rust spots. If there is rust present beneath drywall, sand into the drywall to remove the rust as well.
Paint the corner bead with enamel primer. Tape off the wall, if necessary, with blue masking tape. Spray on two coats of primer, allowing 30 minutes of drying time between coats. Lightly sand the final primer coat to provide a bonding surface for the spackling compound.
Replace damaged drywall with spackling compound. Smooth on the compound with a 6-inch putty knife and allow it to set for 30 minutes to one hour and sand the comound smooth with 120-grit sand paper.
Apply three coats of latex interior primer, covering the drywall and new spackling. Allow 30 minutes drying time between coats. Roll on the primer with a small roller, rolling vertically up and down the corner bead and wall. Rub the primer down with #0000 steel wool to roughen the surface of the primer. This will provide a bonding surface for the final paint layers, preventing moisture from passing through the paint and rusting the corner bead.
Apply three coats of interior latex paint. Roll on one coat with a small roller, allowing the first coat to dry for two hours. After the initial coat, apply the final two coats, allowing 30 minutes drying time between coats.