That's the wrong type front sight blade which explains why the base is beat to crap trying to keep it tight. Don't beat on it any more. Get the right type blade for the solid front sight base. I may have one here the same height. Email me if you want it.
There's nothing wrong with the Parkerized finish and I don't think the markings are damaged at all. It isn't original but post WWII they were Parkerized and painted so all you need is a paint job if you want it to be to MoD rustproof specification. Clean the varnish off, finish with raw linseed oil, paint the metal and Bob's your Uncle!