It doesn't look too bad...
Is the discoloration on the paint rust or is it just oil stains? The dings seem to be just paint-deep.
I'm not sure about what kind of paint this is, but old solvent-based paints had a tendency of going "yellow" over the years. Newer solvent based paints are often advertised that they don't go yellow over the years. But that's for wall paints.
Maybe something like this:
1. Strip everything from the bike.
2. Clean everything with a rust removing product like WD40, using either a soft cloth and some manual work, or maybe you could use a polish bit on a drill or one of these Dremel machines.
3. The wheels seem to be a bit discolored - corroded.
4. Another option is to use an Ultrasonic parts cleaner. Alot of automotive and jewelry shops have these and use them to clean parts without using sanders etc.
5. Re-lace - true the wheels.
6. Replace all cables and possibly any plastic housings that might have dried out and are cracked. Also replace tubes, tires and brake pads.
7. The dings don't look that bad, but if you want to make it "Sunday ride" grade - new
then you can maybe re-spray it. Maybe you can spray-paint it with wet paint in a shop for a nice shinny look instead of powder-coating. You will probably need to remove the paint, either with a chemical paint stripper (naaaaaasty stuff
) or sand blasting. That's a good time to check the frame for cracks etc too.
8. If you find some decal designs over the net, you can order them on a decal-shop
9. After painting etc, you can apply a corrosion inhibitor to the inside of the frame. (Also very naaaaaaasty.
)
10. Are the grips glued? Can you remove them by wrapping them with a cloth and twist-pull them using pliers without damaging them?
11. Add some original parts like a rack or a dynamo light system?
12. Never use it again?
