Sounds like the rust has found it's way through the galvanize coating on the pipe.
Not much you can do now except to sand the rusty area til all the rust is gone, then wipe down the entire stack with a solvent such as lacquer thinner or brake clean to remove all dirt, soot and oil from the surface, then spray paint the stack with hi temp silver paint.
It'll look great again for now, but once the salt season sets in, that galvanize free area will start to rust through the paint again.
Not much else you can do except replace the stack with a new one.