For a free, rusty old tool box that a year from now is going to be dented, scratched and dirty most likey... I wouldn't spend the money on a sander or use too much elbow grease hand sanding. Hit it with a wire brush to knock the loose stuff off, brush it with the Rustoleum. Rust seems to absorb Rustoleum, makes the paint adhere real good. Got to brush it or roll it though, sprayed paint is harder to make stick well.
Get the numbers off the locks. Any locksmith shop can make keys for it with the numbers, 10 bucks. No need to buy new locks.