Either get a radiator shop to clean and seal it or try Kreem for the tank. Follow the instructions that come with Kreem exactly and you'll end up with good results.
I agree, the rad shop should paint and seal it for you, I always send my tank to the rad shop when I get 1 or 2 in, the are the best bar none to remove and seal the tank for future use.Ialso agree with Moskito- if you cant afford the rad shop, here it is about 90.00 with tax for the job then the gel is also a great way to get the rust out, either way you MUST GET RID OF ALL OF IT, you'll never have any luck getting the 350 to run with rust in the carb, fuel pump, lines etc.It is vitally important you get that tank as clean as possible.