Hard to say what is best yet. Get rid of all the rust before you get to welding. Take a pick hammer to the rusty spot and see how solid it is, cut away anything that is thin and then you can either back & fill with MIG wire or piece that spot.
Looks like you are doing a good job, I personally would switch to sheilding gas instead of the flux core. It is much easier to see your weld puddle without the flux and smoke that the flux core gives off. It looks like you are using a back up panel now, that is what I would do. Take your time, fixing alot of warpage later would suck.