Soak the barrel and nipple in some sort of penetrating oil for a couple days. That will do a couple things.. it will loosen all the rusted parts, and kill any charge that might be in the barrel. If the barrel is in as bad a shape as you describe, it is probably no longer safe to shoot anyway.

Like sabot loader said, it could be a loaded barrel with not only a projectile but a busted ramrod on top of that...

I soak it then try and clear the barrel. After that I would get a green mountian barrel for it, and if necessary replace the lock and hammer. You have a good piece of wood and for about $200.00 could have a nice rifle...