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@JamesNQ
If that cannondale was mine, I'd take it back to bare metal in the areas where it has bubbled up.
Obviously aluminium is porous so any moisture on the inside or the outside of the frame will work its way in and you can never usually tell how deep it's gone until you sand it down.
If the frame has been ridden in the wet, it will be internally and externally contaminated with salt etc. Moisture will eventually work its way out but the salt will stay, waiting for the next time for it to get wet.
Not sure how easy you'll be able to access that area from pictures, but just have a poke around inside the frame and see if anything comes out, will obviously be a milky white powder.
I'd definitely recommend flushing the frame internally to remove any contaminants, then sand the areas down and repaint. Once finished give your frame a heathy coating of wax and it should be ok.
I'm not sure whether it's an age thing or a paint thing... lots of Trek and Cannondale frames of this era suffer from this really badly! If you do decide to repaint, make sure you're not painting in a damp shed and you degrease the surface before you spray (salt from your hands isn't good under paint!). Also use a good quality self-etching primer!
HTH