I've seen rust like that on MSD's even in Sacramento which is low humidity.

Yeah mine did that too.... think it's just condensation from the heat. I found it when I went to EFI and replaced it with the hyperspark set up. My car was running fine before that, I just found it when I did the swap.
Back in the day I remember guys talking about drilling a small hole in the cap to let out the moisture that would tend to build inside the cap

MSD stuff is made for weekend warriors in performance applications. Their caps wear quickly too. OK for low mileage applications. Not so much for a daily driver or longevity. JMO

MSD 6 BTM
 

Glad you got it back up and running!

Food for thought:

When I had a Paxton Novi on my Fox body Mustang years ago I ran a MSD BTM so that it would back off timing as boost increased. I was spinning it up to 10-12lbs of boost with that set up without issue...

Another thing you could look into is a dual sync distributor so that your ECU is controlling the timing and the air/fuel ratio.

Yea not sure why it rusted either. Something I will keep on eye on now.

Thanks I will look into the MSD 6 BTM.