Yes, that's the ball-joint that's rusted. Buy the whole control arm, I don't think the ball-joint itself is serviceable. Stick with Motorcraft, TRW, or Moog.
I would replace it asap. Search the forums for failed lower ball-joints to see what happens. Don't know if the upper ball-joints will fail in the same manner, but it's something I didn't want to find out.
Get yourself an 18mm ratcheting box wrench if you are replacing them yourself, it will make it so much easier/faster and have the car back on the ground before torquing down the control arm bolts.
Last edited by skinnytick; 04-17-2012 at 12:19 AM.