I'm trying to do a budget B16 build and am hoping I can salvage this block without major modifications.

Is there any easy way to fix this rust in the cylinder? It didn't seem like it was there yesterday, but I didn't have a light right on it like I did today. Weird.

Also, There is quite a bit of discoloration and corrosion in the coolant well around the sleeves. Some spots its looks like the corrosion has eaten into the outside walls a little bit. I cleaned off all of the thick corrosion with carb cleaner and a thin round wire brush. How much effect is this going to have on cooling performance and the health of the cooling system in general?

 

Hottank and hone.