Yeah - that's a typically rusty area as moisture accumulates under the closed headlight ears on many bikes. The tree is dead simple to remove - remove the big nuts on top, pull the top triple off and the bottom will drop out of the frame, likely onto your little toe so don't let it drop.
Replace the bearings with tapered ones, grease them up really well (some people fill the head tube with grease) and then replace the tree. Tighten the big nut till the tree moves freely but there's no play in it and then tighten the lock nut.