Rusting is a type of corrosion, and thus possible confusion is to be expected and accepted. To me, involving water is moot. Whatever chemical (including water) that is a catalyst for oxidation doesn't mater. Rusting is oxidation. Some other types of corrosion are also oxidation, and some are not. I don't have, nor could I quickly find, a concise explanation for the difference between oxidation, reduction, and/or reduction-oxidation, and I presume that's just the tip of the ICEBERG.
But is the vague distinction even applicable in other real world languages? I wouldn't be surprised if there were some that didn't bother pointing out that rust is a special case; I wouldn't be surprised if some people or groups of people use any of these words synonymous.
I don't think hashing up modern chemistry too much is a good idea in a medieval fantasy game where high-tech was known as 'alchemy', particularly where only magical alchemy is referenced and we see no chemical alchemy at work. I know that the difference at hand is real, but also that it's partially semantical. We should keep the semantics out of a theme where those semantics didn't exist.
I'd be for simplification of this academic case.