If it is only light rust, green pan scourers are a pretty safe way to remove the rust. Oil and fine emery should deal with the more serious areas, but beware of working hard locally so that the surface is longer uniformly flat.
You will be recommended to use Myford approved lubricants, but I always used engine oil on mine. The oil contains additives which are not needed for the lightly loaded bearings (compared to the loads, temperatures, and chemical conditions experienced in an engine) in the lathe.
Engine oils are always available, and a 5 litre container is probably a lot cheaper, relatively, than a small quantity of a much simpler spindle oil such as Nuto.
For the gears, I would advise something more glutinous, since the lubricant will only be applied intermittently.
Again, motor type oils such as SAE 90 grade will suffice, (SAE 140 would be better being higher viscosity and so less likely to drip or be flung off, but will probably be less easily available). EP (Hypoid) oils will suffice, but you do not need the surface reactants intended to cope with the very shear and pressure loads for which they are formulated.
Since speeds and loads are relatively low, you do not need, (and cannot reproduce) a constant flow of oil to lubricate and cool the shaft/bearing and tooth/tooth interfaces met in internal combustion engines and vehicle gearboxes.
What paints , and how you apply them will depend upon what sort of finish you are expecting to produce.
For a purely working machine, you might decide that a plain enamel onto a clean surface will suffice.
Alternatively, you may wish to produce a car type mirror finish for show purposes. In which case you will need to apply stopper, primer, under coat and several top coats, flatting down between applications, with a final burnish of the top coat.
An unpainted machine will work just as well, but probably rust, and certainly not look so pretty. At the other extreme, you can make it to so gorgeous that you are scared to use it for fear of marking the paint , unless it is intended purely as a showpiece.
You must decide where you want to be, between the two extremes.
One plea, please do not paint it some hideous odd colour, such as purple, pink or pistachio green!
My preference would be to replicate the original colour, if possible.
Myfords used Grey for early 7s, then Turquoise, and then Industrial Green.
In Industry, machines were usually some shade of Gray, Industrial Green, or Powder Blue (used by Rolls Royce Aero Engine Division at one time). In my experience, Centre, Capstan and Turret lathes tended to be Grey, whilst Milling Machines were Industrial Green. Grinders were Grey or Dark Blue as I recall.
Probably the aim was to use a colour that did not cause eye strain.
Howard