Rear Diff Rust

my rear end looks similar to yours. ultimately to get all the rust off I needed a flat nose driver and a hammer then I pour 15'd the rear axle then I covered that POR 15 in Grease and then I sprayed the woolwax over the grease... I used Marine grease as well I don't think water is ever getting in there lololol

 

There's a couple of threads that discuss neutralizing the rust. Some people have said that working with POR15 was difficult to get results. Particularly when painting over the treatment. I have no experience with POR15, but I did use Ospho on my diff, then painted with rustoleum. So far no paint flaking.