Ecologically they exist in areas where there is plentiful reduced metal as well as a decent amount of iron and metal ores (oxides).
Their entire constitution is metallic oxides – they are not fond of only iron. This makes the rust monster a living ceramic of extreme toughness. The older ones do become brittle over time, but when they are born they are made entirely of cartiledgeous biological material. the early stages are an entirely mineral egg that looks like a hardened stone, sometimes semi-crystalline. They look a little more like armadillos for the first few years as they grow. as they reach maturity they start to go further and further down into the earth, where conditions are more extreme. they can get along with tremendous pressures and temperatures as they mature and the flesh is replaced by the fluid ceramics that are their adult flesh. Because of their surface origins, a magical curse, there are periodic migrations to the surface to mate, which makes for tragic consequences to the locals and their commerce.
The metabolism is odd – it cannot be further oxidation – perhaps they need oxygen to live, but the oxidation substrate is not the metal itself as this is done before ingestion. What is their waste like? I do not know. Is the metal consumed? I do not know. Perhaps they just use the iron to supplement their diet and they build nests/eggs out of it? the oxidizing tenticles must have more than one function in life. The glands there are quite useful – for disintegration and for disenchantment for they also take in magical energies through those organs. the magic is their metabolism? Are they gathering it for some plan or purpose long since forgotten?
They also have a hibernation state which is related to a seasonal effect deep in the earth in their more native homelands. they curl into a ball and their carapace, normally quite durable becomes quite impregnable until they come out. In this form they can survive exposure to lava flows if need be. This is a state of magical privation, so when they sense magical metal they awaken and come after it.
In this case they can be found in these ancient dwarven ruins – they are a particular curse on the dwarves as they consume the pyrite towers and gigantic metal structures the dwarves have made there. the city is in ruin and there are many rust monsters, still the magic and iron remain.