What kind of car are we talking about? Make, model, year would be very helpful.
That ‘Rust Dust’ comes from somewhere, and is probably from the bushings, springs, or weights. I’ve had the mechanical advance weights rust in place, and prevent the mechanical advance from working at all. I’ve seen springs pop loose or break. Simply spraying them with something doesn’t fix that.
Also, if the o-ring is shot, chances are the shaft seals are bad. Leaks in the shaft seals will let oil in under the cap and lead to mis-fires.
That’s why I suggested a replacement.