Yeah... that's the lacquer flaking off. It just happens over time. If you want to keep any part of the original finish, you could give it a light sanding with a low number steel wool followed by a good wipe down with lacquer thinner then top it back with more clear lacquer over a period of a few weeks. Then the finish would be as original as possible. You may have to wait until next summer to do this because of the way lacquer behaves. Like I had said, you can polish out the rust with brasso but this will take longer than 000 or 0000 steel wool and WD-40. The WD-40 is more of a lubricant with the steel wool but it is light enough to dissolve any crud without breaking into the finish so it’s recommended to use with steel wool but you have to be careful not to scuff up the clear lacquer on this bike because there is no turning back if that happens. You can test the spot you want to clean with a bit of lacquer thinner. If where you put it tacks up then it has lacquer there.
I was reading another post on this site and someone made a good point of wondering why to clear coat chrome anyhow. Protection is the main reason I'm sure they did this, but after some time you'll get what you're seeing which is flaking and inconsistencies in the finish. I was going to strip and clear coat mine again but why bother, I just stripped it. My bike going to stay inside as long as I own it and the chrome is much brighter without a clear coat anyhow. Clear coat is great over paint but not chrome if you ask me. Lacquer is also really hard to work with out of a spray can unless you have very good conditions. There’s only a few weeks here where the humidity is low enough for me to work with lacquer so I avoid it unless I’m doing something special that I can bring inside and bake. Whatever you spray with it also has to be very clean and unprimed two huge drawbacks for me.
Krylon makes some good quality candy paint named "Metals" which I used with excellent results. These are enamel so this paint mixes well with other spray paints. I did a glitter finish and was impressed with the coverage of the Krylon candy paint over the glitter too. Avoid the Valspar spray paints at all costs. If you're going to stay with the original paint on the fork, tank and carrier (and you probably should), don't use anything harsher than a good quality cleaner/wax. Anything stronger than naphtha will wreck the candy paint since none of it has clear coat over the colored finishes. If you have to remove something like tar, use naphtha, not goof off or tar remover.
I hope that you just leave it and enjoy it the way it is. There's plenty of wrecked up flightliners that you can buy for a hundred bucks in so-so condition but it takes a long time to find all the parts your bike has and in as good of condition. Sell yours and get two or three to play with. You will still have money left over. Anything better than yours is a thousand dollar bike. There's one on eBay now that I would bet will go over a grand.
Tires are OK, but showing their age with some cracking. 
