Whats with this plant

Plant' prolly sick of the cup. You're past seedling. Time to move to veg.

The true meaning of "over-watering" is watering too frequently. A grower can both water too frequently and not provide the plant with enough water at the same time. It's actually a common mistake for a newer grower. Always water until run-off and then allow dry-back so the container is light before watering again. The leaf damage looks 100% like a watering issue. Part of that watering issue is the plant has outgrown its container. It's certainly time to transplant! Don't try to transplant while the soil is so dry. Prepare the medium in your new container and get it wet enough so that when you squeeze a handful of the medium, you see a couple of drops of water drip out between your fingers. This is called "field capacity" and its the right amount of moisture for a new transplant to be transplanted in. Water your plant in its current container, then pop it out and place it into the new container. Fill in around it with some pre-dampened soil and then a real gentle watering to make sure the soil in the planter comes together with the soil from the transplant. Never use cal-mag on a plant that young unless the plant is showing a calcium deficiency. It's highly unlikely since calcium needs at this stage of growth are very low. So no, cal-mag is not the magic band-aide.

i would suggest a bigger pot so she has room to expand her roots. it could be environmental thats causing the slow growth. The rust spots could be a calcium issue starting. it could also be that you need to dechlorinate your water before use. also rust spots can be a type of fungus/pathogen on your leaves. i may disagree with the previous answer about the overwatering. i cant tell what medium your using. I would suggest giving her a nice dose of nutrients, specifically nitrogen based and maybe some cal mag if you have it. some nutrient brands make sure to have some calcium and magnesium along with the normal npk but others dont so it can be helpful tk check that. but a bigger pot and a bit of nitrogen and i think she would perk up and respond well to some nutrition.

Based off the appearance of the medium and the form of the lower leaves, I would imagine this is related to overwatering. IME, over/underwatering can complicate defeciency identification. Past that, I would recommend familiarizing yourself with a tool for identifying deficiencies yourself as well. KIS Organics has one of the more grow-friendly version I have seen. Search "A Dichotomous Key for Understanding Nutrient Deficiencies" in Google for a good starting point.