+1 using Frame Saver. I live in a rainy area and use it on all my steel bikes.
If you want to completely clean the rust off before application, use a copper wire cone brush (w/ long drill attachment) big enough to fit snugly in the seat tube. Use the low-speed drill setting and gradually run it up and down the inside of the tube. You can also use a rust cleaner and apply it to the brush or even some WD40 to help break up the rust.
If you have it, you can clean out the tube with a sponge brush attachment. Next, plug up the holes of the frame and lightly spray the Frame Saver inside. Roll the frame around to completely coat and set aside to dry for 24-48 hours. It will feel tacky, but not wet when dry.
To completely side step this problem, you could also buy a non-steel seat post.