You've got a leak. That white crusty stuff in your picture is dried brake fluid. The up side is you have a master cylinder that looks to be in good condition. The rebuild kits are on e-bay for a reasonable price. Pull it, clean it, soak the circlip in oil for a day and free it up. The rebuild is a breeze. XXX steel will used gently will smooth the corrosion, if any, on the inside. A small wire brush will get the big stuff on the outside. Check the tube to the reservoir for leaks, check the o-ring on that black plastic spigot the hose connects to. Clean carefully, degrease, blow it out with compressed air and paint with rustolium or some such to protect the aluminum. You'll be good to go. You can reuse the copper seals by heating them bright orange and quenching them quickly in cold water. Let us know how it goes !