Rust is the stuff that's left over when the iron and the oxygen in the air react, it doesn't actually "eat" the iron - it's the ash left when the fire has burned and is relatively inert. Problem is its rough and tends to grip the things that encourage rust.
What Waxoyl does is try to provide an airtight barrier between the iron and the air, which means the oxygen in it isn't there to react and cause the rust. If you apply waxoyl to the rust, coz it's rough, there's a danger that you might be locking air (or water) inside this barrier, which will encourage the reaction.
The most important thing with the chassis is to prevent water (especially water with chemicals in it, which speeds up the reaction - like salt) clinging to it, so apply waxoyl to the inside of the chassis when it is clean but give the outside a really good wash with clean (un soaped) water, getting to all the bits where the mud clings on.
Best bet of course is to provide something sacrificial to rust instead, like zinc, so if poss get galvy which will last forever, but failing that a zinc rich paint will do the trick. Trewey posted a link to some really good stuff the other day!