That engine is crazy clean. Rust at the manifold / elbow joint can be cleaned up. On next maintenance cycle, you can split them, clean up, prime and paint, then install new "GOOD" OEM graphite gaskets (not the green paper ones) and reassemble.
Those capped off fittings are normal for a raw water cooled manifold with OEM elbows. Those fittings are used on a closed cooling system where the manifolds are cooled by engine coolant and the raw water discharge from the heat exchanger is plumbed to those fittings to cool the elbows and be discharger out through exhaust (there is also going to be a block off plate installed between the manifold and the elbow in that set up, isolating raw water from engine coolant)