just a fast comment the rust dont come of the stainless steal ring if there is any in them the rust comes out the engine and a loose clamps, after all it is cooling water that go to the enginge to cool the hot air down and inside the engine it is never paintent it is the same with your central heating in your house if you are disconnecting a unit the water that comes out is also brown hell so dont wurry to mutch about the collor just make sure the clamps are good closed (thight = thight )
my exhaust was leaking exhaust water thru the place where the stainless union and the glass exhaust pipe are bonded together.my 12 cylinders are 96 models.on skips pic if you look on the support rod it is usally welded to the union to support the y pipe
DD4: Had the SS sleeve deteriorated or just seperated from the Muffler? And ,do you think the sleeve was the source of the rust, or more like pbekker's explanation?
the sleeve was both corroded and leaking.the saltwater reacts to the stainless and it definitely shows rust stains.i took it out to get repaired