Water in cylinder, now rust, now what?

IMO it's a big mistake not disassembling and honing the cylinders properly. Now you have changed the finish on that one cylinder with some very harsh abrasive paper. Generally, hones are in the 400 grit range, so that shows you how coarse you went. No way you have the correct finish in that cylinder. Rings are cheap. You should do it right. Hone it and rering it.