| If the key is spelled as A Rusty Key then it will open a door in the ancient elven ruin of Nornal.
If the key is spelled as Rusty Key it will be part of an miscellaneous quests that doesn't show up in the quest log. You can start this quest when you are doing the Lifting the Vale quest given you by the countess of Bruma.
In the Pale Pass there is a Frozen Barrel in a lake containing a letter of an unlucky thief and how he had hidden his magical ring in the area. You will have to find three chests in the Pale Pass two of them containing a key to next chest and the third containing the ring. | 
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