I installed a new water heater 2-3 years ago. I put 3/4 pipe to PEX adapters on it and then used pex to connect to my house. On the hot water outlet, corrosion and rust is forming. I bought some plastic lined nipples after I read about dialectric separation, but in thinking about it, I'm pretty sure my Whirlpool water heater already has the plastic lined nipples. There is a warning sticker about not applying heat because its conneted to a plastic dip tube. Could the brass fitting on the galvanized pipe be causing the rust? How can I fix this? Is there such a thing as a pex adapter that is coated with plastic so its insulated? Should I just take it apart, clean it, and put teflon tape on the threads? I will probably still add joint compound (Rector Seal).
With brass connected to galvanised pipe you can get some galvanic corrosion. There is something called a dielectic union which I've never needed to use. That may help. You'll need to clean up the rust. That may require cutting out the rusted part or at least scraping it off.
Here's a picture that describes the dielectric union joint.