corner-bead
I hired a company to finish the drywall job in my room. One of the things that sticks out like a sore thumb is the exposed edges of corner bead. I have never seen corner bead exposed like this. Isn't it supposed to be covered with a coat of mud or are you actually supposed to paint over it?
I've always butted them together, and I've never had any problems with doing it that way.
Not sure what your builder was thinking by overlapping them.
You want to take a moderate to fine grit sandpaper and try to sand as much of the visible rust off as possible around the outside corner. Don't be concerned about plaster or drywall damage just yet.
Next get a good rust sealing primer like this product:
Spray liberally along the outside corner until the metal is fully covered.
Next, spackle then sand the damaged areas and hit the area once more with a regular latex based primer. Apply two coats of paint to match the wall and you should no longer have problems with the outside corner.
Best Answer
Examine any corner in any building and you'll find that the paint is on plaster, not metal. (Interior paint - even with primer - will scrape off of metal way too easily)
The plaster is supposed to just cover the metal corner, neatly.
In short - your drywallers (if these are the same guys who botched all the screws) suck.