Mike,
Norman is quite correct. Right now, good solid information should be your top priority. In fact I wouldn't touch that lathe for at least a couple of weeks or months till you've done a lot of research. Without that you could easily do permanent damage. Rebuild? Yes that can be done, and I highly recommend it, IF your willing to do what that rebuilt term actually means. There's far more to it than a lot think. Your first stop should be over at
www.practicalmachinist.com scroll down to the South Bend lathes forum, no that's not your brand of lathe, but you'll find more than enough information from past posts about lathe rebuilding if you do some diligent searching. You won't be able to post any questions about your lathe since that forum is about South Bend lathes and only those lathes.
You will need to be very careful while taking your new purchase apart, take lots of pictures and lay the parts out in logical order, only work on one part at a time. Parts like bearing caps have to go back in the exact same position they came from. Even properly ground screw drivers are required that fit the screw heads completely are necessary to prevent breaking the heads off or tearing up the heads. Mangled screw heads are a sure sign of a heavy handed incompetent who should know better. Improper use of abrasives on the wrong areas can and will permanently damage your machine. THAT'S NOT HOW IT'S DONE. With the work done correctly, you can have a rebuilt lathe that's as good as the day it left the factory or even better. Do it wrong? It won't be fit to make a good boat anchor. Most likely it's going to require a professional shop that is well qualified and has the right equipment to regrind the bed, slides, and refit them. It's not exactly cheap, but that is part of doing an actual rebuild if it's worn enough. Cleaning it up and throwing a fresh coat of paint on it is not, and never will be a rebuild. You should do the work with the thought that it's not going to be fast, easy, or all that cheap. Your lathe was built well enough that it should get the respect it deserves and not butchered like a dead pig. Getting that lathe apart and cleaned up so a proper assessment can be made for exactly what's needed is only the first step. That's when you take detailed pictures and post them here.
Do's & dont's? That could easily end up making this 10 pages long. The question is a little too broad to answer properly. You really need to do a lot of reading on past posts on every forum you can think of, and then come back with specific questions for what you don't quite understand.
One of the reasons both Norman and I along with some others will recommend those older books written by the English greats, is that they are written with the hobbyist in mind, and all the information is in them that you'll ever need. But YOU have to be willing to put the time, dedication, and spend some money to educate yourself. There isn't any short cuts to this. Forums like this are good, But you'll rarely get the complete hard detailed information you'll need to fully understand the subject. A good selection of reference books are just another part of the tools you need to operate any machine tool at the hobby level. And sometimes their even more important than the tools themselves.
There seems to be a strange reluctance by far too many to put some time, effort, and money towards that self education. Yet every dime spent towards that education will be repaid many times over for the rest of your life. Machining as a hobby requires a certain minimum level of knowledge to even be able to ask the correct questions, at that point and with a little time, you can then start to logically figure things out on your own.
About now your probably wondering what you've gotten yourself into, at the beginning it seems like a huge task ahead of you. It does get a lot easier later. The rewards are well worth the effort.
Pete
