Sealing rusted spots for safety

Polyurethane is the modern standby product. Water-based is easier to work with, but oil-based is more durable.

One coat, steel wool, another coat or two. Keep 'em light to minimize runs.

For small nail holes, use spackle. This is the simplest, cheapest way to fill small holes that aren't subject to significant movement.

For cracks/seams, such as at corners or around window trim, use caulk (probably a paintable latex or latex+silicone caulk, as they're easy to work with).

For deeper holes/cavities, such as around a pipe that is going through your floor, use expanding spray foam. This product will expand around whatever stuff is there, providing a good seal to block insects. But beware that the expansion can come with a lot of force, so don't overfill; if you're working in tight places, the expansion can cause damage. Around windows and doors especially use a minimum-expansion foam.

After patching the hole, make sure to seal the repair with primer before you paint it.