Point-of-use tankless water heaters

I narrowed it down to the tank because it only starts dripping when I run hot water and the pump never shuts off. The water heater is an Atwood GC6A-7E. I'm not sure if this one can be saved. Right at the back at the water in and hot water out lines the base where it meets the tank is all rusty but if I fill the tank and plug the holes the water stays in there. I haven't pressured up the tank yet but I think that may be my problem. Also noticed upon draining the tank the water is dark grey and there's lots of sediments and silt and it feels like there's something knocking around in there. It glugs out of there for a few seconds then stops and needs to be shook around a bit to continue. Should I be throwing this thing in the trash or is it salvageable? Sorry for all questions this is my first time talking with other people who actually know about trailers.