I would almost bet you could clean that rust up, take a big 'ole piece of sheet metal big enough to reach past one or two uprights, pop-rivet it on, duct tape (Three layers please.) and put your vinyl in.
Isn't there some kind of bead receiver for the liner? Maybe that thing is rusting away, and you're seeing the rust stains from that on the walls!
Closer inspection. More pictures. Just walk in there, take 4 deep breaths, and go for it!
Ooooo! New post while I'm typing!
Bid LOW!!! If you don't win, it's their headache, and you can laugh at 'em later!