Engine overheated, brown clay or rust colored gunk in the radiator

I had a build-up of some brown clay or rust colored gunk under my radiator cap. I figured I had a minor clog because everything was working fine. I would just have to add water on a bi weekly or so basis. About a month and a half of doing that, all of sudden (while stationary) my car overheated to about a 1/3 into the "red zone". I opened the radiator cap, and brown water came out. I added clean water, and let it cool for about 4 hours. Then I drove it home, and when I almost got there (which only 3 miles away), it started overheating in the same fashion, and smoking slightly. So I parked it, and added water again. When I cranked the engine back on, the engine ran of course, but it was making mechanical noises, like something was screeching, or grinding. Any idea? Or did I ruin the engine by not properly handling my radiator situation? Thanks in advance.