smeg dishwasher fault any ideas ?

Everytime I run a cycle on my Smeg D1612CA it comes out with white residue, everything tastes of salt, its not always clean, slight rust marke appeared on cuttlery and pans and on the inside of the dishwasher chamber and the glassware is dirty and cloudy.

Seems to be dispensing alot of salt as the levels keep reducing after 1 or two washers. I have checked the setting on the side and it was at 3, now put this down to setting 2.

I have taken the side panel off where the salt chamber is located at there is another chamber next to it which is full up with a orange/browny stuff, don't know what that is, can't find out what the chamber is for either.

Can you offer any advice as to what this could be and what is the problem??
Many Thanks

Ian Chapman
March 2011