Should I upgrade/rebuild an old rusty bike or get a new one? A couple days ago my friend gave me an old bike.

Much of the bike is very rusty although the frame and handlebar does not have as much rust.
I am not a bike expert and have been learning quite a bit about bikes on the internet since the day I received the bike. I looked it up on Google and found that it is worth somewhere around $200 and is pretty much something you can get at Walmart.

Since the bike is so broken down and rusty I thought of reusing the frame and getting everything else to make a new bike. My budget for the parts is about $200. I am planning on riding about 150 miles a week on the bike.

What I am asking is should I be at all concerned about the quality of the frame?

Or do you think I should save up for a pre-built bike?
Personally, I would save up for a decent bike in better condition. The cost of labor to overhaul a bike is substantial, and it's not really worth it if the bike components are crummy to start with. You may end up spending more in components and labor than getting a decent bike. There are frequently deals to be had on decent used bikes.