There is no foam or paper element in the air filter. Only the metal sceen that is cleanable. If it has rust on it replace it and fog it with a water dispersant like wd 40 to prevent future rust.
I would drain out all of that old oil ad replace it with a good quality modern synthetic oil. When you drain all of the oil out you will have to bleed air from the pump and lines by removing the bleed screw at the pump and allow the oil to drain though it untill all air is purged from the system.
To check the pump opperation and output you will have to disconnect the oil line from the intake manifold and plug the nipple on the manifold up. Now hook up an auxillary fuel tank that has the proper oil and gas mixture in it. You should start the engine and allow it to warm up for about 10 minutes to pruge air from the output line of the pump. You will need to run the engine for 4 1/2 minutes at 3,500 rpm and see how much oil is pumped out of the line. The correct amount is 10 cc .