Welcome, read, learn, learn, learn, read, learn
Do not strip it down just yet. One of the biggest mistakes that occurs is the "ill stip it and fix it up" before understanding anything about the bike or the best process for the situation. meaning if the engine turns over and the wiring is in good condition then working on it as is and fixing things in an orderly fashion will help you work out what
needs to be done. Often things are done and money spent unnecessarily.
Seems to be more surface rust than anything. The bike could be gone over and engine started, (unless seized), with the necessary oil change and carb clean before hand.
If the wiring is intact then i would suggest starting with that and go over every connection, (especially earth/grounds), and coupling and bullet connector and dissemble and check for damage, clean and reconnect.
Get a Muti-meter, reasonable quality, learn to use it and do a continuity check on the wires as you go, this will help to isolate any problems.
Electrical links, a must read;
http://www.xs650.com/forum/showthread.php?t=9625
http://www.xs650.com/forum/showthread.php?t=10561
http://www.xs650.com/forum/showthread.php?t=18925&highlight=musings
http://www.xs650.com/forum/showthread.php?t=18305
http://www.xs650.com/forum/showthread.php?t=41775
http://www.w8ji.com/dielectric_grease_vs_conductive_grease.htm
A lot of that chrome will restore to a reasonable level with a muric acid bath, Vinigar or molassis, will remove the rust and a polish will bring it up so it is acceptable for an everyday rider and can be upgraded as time/money permits. These early 70-73 model parts are getting harder to find in good nick and expensive, so if your chrome parts are not dented and clean up ok then they can be chromed or whatever later ondown the track
Bit of a rant but again i state
dont strip it down yet. Learn and do as much work on it as it is.
Remember cosmetics do not make a bike run well it is the unseen work.