For my inaugural Cafe Husky mod post, I thought I'd start with my in-process solution to the swingarm being totally full of rusty latte. Call me idiosyncratic, but I decided I'd rather crash a motorcycle because I was going too fast than because I was going too fast and my swingarm disintegrated on me after a long slow hideous process of air and water turning my steel into iron oxide.
As others have noted, the water is entering the swingarm at these two holes, where the mud flap mounts by way of two weak sauce plastic screw inserts:
View attachment 43498
To deal with the rust already inside, others have suggested spraying WD-40 or similar in there. The problem I see with that is that it won't coat every surface, nor will it stop the rust from propagating.
My solution:
1) Drill drain holes in the bottom of the swingarm about two inches in front of the axle nut (lowest point you can drill without hitting stuff inside the swingarm).
2) Buy this stuff, because it KICKS ASS:

Read about it here:
http://www.eastwood.com/internal-frame-coating-w-spray-nozzle.html
3) Stick its long skinny hose up every hole in the swingarm and coat the whole thing with this sweet phenolic resin zinc phosphate miracle. As an aside, I do not recommend filling the swingarm with expanding foam. It's porous, doesn't stop rust already in there, and won't stop future rust. This stuff will.
To deal with the water getting in, others further up the post have suggested drilling and tapping the holes, then bolting down the mudflap using stainless bolts and washers. The problem I see with this is that no matter how well you seal the threads of the bolts, you still have a floppy rubber mudflap in between your bolt head and the swingarm which leaves a gap where water can penetrate.
My solution:
1) drill and tap the two mudflap holes to 5/8, as others have done.
2) Take two stainless 5/8th bolts and drill about a 1/8th inch hole right down the center of the bolts, being careful not to drill all the way through. Like this:
View attachment 43500
Yes, the tap broke off in the bolt on the left. After chugging a bottle of vodka and beating my chest in primal rage, I got over it. Next I'm going to:
1) Coat the threads of the 5/8th bolts with thread sealant.
2) Using the rubber-coated washers in the pic, tighten the bolts into the swingarm. Between the sealant and washers, no water will ever get in there ever again, forever, until death do we part, and not even then.
3) Using the smaller bolts and some washers with a full-inch OD, bolt the mudflap to the tapped holes in the big bolts with the smaller bolts.
4) Drill some drain holes in the bottom of the swingarm about two inches in front of the axle nut (lowest point on the swingarm where you can drill all the way through without hitting the adjustment bolt inside there.) When I drilled my drain holes, a ton of water came out. It left this Jackson Pollock on the garage floor:
