As for using those tanks, they should work for awhile. Yes, I am sure they will rust out, but if in decent shape it should take years perhaps. Air compressor tanks rust out holes from the inside just being used as air tanks, from the moisture in the air turning to water, then people don't drain them half the time so they rust out.

I've cut open old well bladder tanks, yes the tops were even rusty inside. Most recent one when I cleaned it up inside after removing the bladder, I was getting a rusty mud as I scrubbed it a bit. This one will be a heat storage unit. I cut it open cleaned it, removed the bladder, put in a copper tubbing coil, welded it back together, sealed around the tubbing with JB Weld. Have not installed it in the Van yet. Purpose of this one is to hold 20gal hot water, the tubing connects to the heater hoses for the rear heater in the van already. So when I drive the hot coolent will flow through the copper tube inside the tank and heat the water in the tank. When I stop to take a nap in the back of the van I got 20gal hot water radiating heat to keep the rear of the van warm longer. It will already be warm because of the rear heater running while driving, tank is just to keep it warm after heater is turned off.
 I did not want to put 20Gal coolant into the tank though, that would have been easier I guess. Anyway that tank was made for water wells, and it was rusty inside.

I also made one nearly the same to use as part of a still when I get my alcohol fuel permit, it also was rusty and muddish like when I cleaned it out. The mud is the surface rust being washed and scrubbed loose.

Even galvanized tanks I get alot of are rusted from the inside out. Many are also from water wells or storage. I find a little pinhole leak in one near a small brownish area, poke around it a little with a screwdriver or such and I find a bigger hole comming out from inside. The other day I wanted a fitting from a rusty tank, metal looked fine on the tank where the female fitting was welded on, but when I tried to turn the fitting I wanted out  the side of the tank ripped out, rusted inside. I knew that one was bad, but lots of good fittings on it, so I brought it home anyway.

 If you have a good tank to begin with it should last for years, but eventually it will rust out when used for water. For anything like heating water then I normally would use an old hot water tank, if you can. They have a liner in them, some kind of coating, not sure exactly what it is, I knew once, but they don't rust out nearly as fast as any other steel type tanks. Most I have found if they rusted, it was from the outside which is not coated the same way. I get hot water tanks free or up to $3 often from scrap yards or people just throwing them away, wanting them hauled off anyway. Most the time I get about $5-$10 of used copper or brass fittings on them also, then I don't have to buy those later. If you can, I recomend you look for those.
 Normally the only thing wrong with such tanks I get are they are full of sediment, if your cutting them open anyway it's very easy to get out, if not cutting them then a little time flushing them, poking around with a stick, a bit of shaking, and the sediment eventaully washes out. I used alot of these and clean them that way. Before we got a well, I carried 4 30gal or larger water tanks in the back of a truck and filled up at various places to bring home. All scrap yard or throw away tanks, no leaks, just needed cleaned out.

What are you using the water for, if just heating the house not important, but if it is hot water for people use, beware if you paint the inside of the tanks what you use, and I would not like rusty tanks either myself for bathing or drinking.

 Also along the idea hot water tanks don't rust out very fast if at all. About 7 years ago or longer I had some animals I needed feeders and waterers for. I cut several hot water tanks in half, they are still in the yard and woods, no rust sitting outdoors cut in half many years now.
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nothing to lose

As to your warning on gastanks: yes, I will need to be very careful. I don't want to read in the newspaper that something happened to me... No cutting will be necessary, and I don't intend to weld, but a good brushing to get the rust of should be enough if there is any gas left in the tank. I intend to fill it several times with water, shake it about, drain it, fill it with water, etc. Finally, put in a hose from the compressor and dry it/flush it out for 1/2 hour. That should do the trick. If not, and you suddenly notice I no longer visit the board, you can guess what happened ;-)

YOU CANNOT BE TOO CAREFUL WITH SUCH TANKS. I'd never recommend to anyone else doing this kind of work on it, but that's only because I don't other people much. (don't get me started on that one).

The tank would be mainly used for hot water for the washing machine and perhaps also showers, so rust shouldn't be there; I don't like all my white clothes ending up brown :-) , let alone myself.

My guess though is that any rust will float to the bottom, while hot water is being drained from the top.

BTW, I do have a copper water container, but it's basically a big bucket, without a top on it; i.e., not a pressure vessel. I might try to close it by soldering but even if I would, the dimensions are not as nice as the other (gas) tank (LPG, not gasoline). Also, I'm still doubting whether I should first construct a small one with the 25l compressor tank; then again, it would take some material and a lot of time, with only limited results. (After building my first small genny 'to get a feel for it', I will no longer spend lots of effort on small trinkets just to see whether it works or not, when with just a little more effort & material you can get 'the real thing'. I had been warned about this by e.g. Dan but am stubborn.

Think I'll use the gastank for starters. If in the mean time I find a better vessel (stainless steel or copper) in the coming years, it'l be just a matter of removing the old steel vessel and inserting the better one, without too much hassle.

BTW, I intend to use PVC hardware on the tank, because of possible problems with electrolysis (galvanic corrosion, i.e. steel vs. copper). Or should just covering all the contact points (threading etc) with teflon tape be enough?

Funny, a hot water batch heater seems very simple, but once you start thinking about it, there are lots of little things that can go wrong. Like pressure: when the water heats up, it expands. Normally, I don't see expansion tanks on batch heaters; that's because they're connected to a 'normal' water heater (backup heater). But if you connect it straight to the warm-water line, I think you will need an expansion tank.

Or am I wrong on this one? I did a quick calculation on it (pV=nRT), until I realized that one is only valid for gas... Water being almost incompressible.

Again, thanks for the input,

I caped the flue and  circulate  the hot water from the stove thru it and it heats the water  in the tank for the house.  Going on four years now and no rust problems.

I will use the LPG-tank, but first I will use the 25l-tank from the air compressor. This will be a small trial unit to test construction and whether it works good enough. It should also provide some hot water. Did some calculations, and when I use 1000W/m^2 solar radiation (a bit optimistic, 800W/m^2 may be more realistic in the summer?), the water should heat up to 19deg.C/hour. Note: this is without energy loss due to convection and radiation (black body). I calculated max. temperature when including only black body radiation; it was 99deg.C, just short of boiling. Of course, real temperature would be lower due to convection & conduction, but still. What I found most impressive was the 19deg.C temp rise per hour. Even with half that value I'd be very happy!

Here are some pix:

Despite its bad look, the rust is only superficial; easy to wipe of.

The original compressor; found at a dumpster by the road, couldn't leave it there :-) The air-hose had been cut off, just as the 220-wire, but it was still working apart from that. However, we already have plenty of good compressors, while I needed the tank. Plus it had some nice wheels for another project (welding cart; the first thing I'll weld when I learn it). The motor will be saved too; perhaps a motor conversion one day? Though it's less than ideal, because the compressor is integrated in the casting.

These old air-compressors are a little goldmine for the renewable energy guys; tank for a batch water heater; motor for a conversion. 2 wheels that will always find a use....

Tsk, the things people throw away ;-)

Hope this helps