Just bought my first 914...couple of pics...couple of Q's, any help is greatly appreciated! Options

[pba110]

Alright, so i threw caution to the wind and drove this little guy from ohio 600 miles back to virginia traveling over the blue ridge mountains (stopping to camp and rock climb along the way).
well, much to my pleasant suprise, she made it all the way without a hiccup and we had perfect driving weather until the last 100 miles where it rained like all hell.
so, i have too, too many questions, but ill begin with a few shots of the car. (IMG:style_emoticons/default/piratenanner.gif)
oh, and it's a 1974 1.8 L
(IMG:http://i35.photobucket.com/albums/d189/pba110/914/HPIM1512.jpg)
(IMG:http://i35.photobucket.com/albums/d189/pba110/914/HPIM1511.jpg)
(IMG:http://i35.photobucket.com/albums/d189/pba110/914/HPIM1513.jpg)
(IMG:http://i35.photobucket.com/albums/d189/pba110/914/HPIM1495.jpg)
okay, i went through the car today looking at all the rust issues, and thus far the areas i have found seem only to be surface rust (looked on the underside and went at it with a screwdriver...seems to be okay)...ill be sanding this stuff out tomorrow and applying silverbullet paint which i've heard good things about (doesn't require a perfect prep before painting). MY QUESTION IS THIS: where do you guys think the leak is coming from?
i'm not convinced it's the seals on the tail lights because they seem bone dry. however, i did lift a rubber mat to find the rusted area underwater (IMG:style_emoticons/default/headbang.gif) from sitting in the rain overnight. so it needs to get taken care of asap
(IMG:http://i35.photobucket.com/albums/d189/pba110/914/IMG_1540.jpg)

okay, next is the heating system. seems like the blower engine is dead or very weak...i turn on the cool air and don't get much more than a light, light breeze from the vents under the front window or dash...the HE's looked like they have been taken apart...and the hole to the cabin has been plugged with....
(IMG:http://i35.photobucket.com/albums/d189/pba110/914/IMG_1543.jpg)
...the top of a spray paint can????hahahah....pretty good recycling there. here are the parts i was given with the car
(IMG:http://i35.photobucket.com/albums/d189/pba110/914/IMG_1546.jpg)
so do i need flapper boxes and a new blower engine to get the heat working again or is it more in depth than that...the connecting components seem a little rusty, hopefully i'm not going to have an asthma attack when this thing gets hooked up

other than that, i need to adjust the valves...stupid question but do you need to drain the oil before doing this? this is my first time around with a 914... this board is great, i've been reading on here for awhile before i pulled the trigger on a car...so it goes without saying, despite the car's flaws, i'm absolutely in love.
thanks in advance for any and all help on the above subjects...oh and i do have a few manuals, but they aren't nearly as helpful as the advice of someone that has done this stuff before...thanks~!