"What do i do about the knives? Small sharpner?"
Depends on how precisely you can work AND what "sharpener" you use. It can be done but it's very easy to mess it up worse too! The knives need to be quite sharp, any rounding will make the resistance to beam movement permanant! And replacing that beam these days is iffy, I understand they aren't made by Ohaus anymore.
Actually, you probably don't need to sharpen the edges. Rust flakes make the surfaces 'swell' but, if it's not massive, when the rust is removed the surrounding metal will be lightly pitted but otherwise okay. I would put a drop of gun oil on the knives and rub the rust with a pencil errasure like a sharpener stone. That would likely be enough to remove tiny rust flakes without damage to the sharp edges. (Clean the oil off before using the scale; oil itself won't hurt but it will tend to collect dust.)
"As far as the pivot bar touching a bracket....very possible, easy for that to happen i guess...."
Yep, very. Of course it's very easy to see and correct too. You have, in the opinon of many, the best all around powder scale ever marketed. I got mine in '65, it was a Lyman M-5 at that time but it's the same scale. It still reads the same after having a lot of powder go through that little pan. And it's ready to go that much longer; ain't no digital anything gonna give that kind of service!