I recently bought a 1981 Hobie 16. The hulls and sail are good, but I am replaceing the rigging.
I feel the need to seal the pylons. What should I do?
also, How do I paint the cross bars and Pylons?
Advice much appreciated.

The forward pylons should have small vent tubes in them. This should not be sealed. You can seal everywhere else.

Paint doesn't work well on the alumuinum. We powder coated some boats in the 90's. They looked nice new, but chips and corrosion under the paint made them not so nice looking.

The main concern WRT sealing pylons is the pylon/fiberglass "joint" on top of the hulls. Scrape off any existing sealant, clean off with acetone and seal with a good quality silicone sealant (e.g. RTV). Make sure you get enough sealant in the track area of the pylon. (The pylons and mast are made from the same extrusion.) Pylons are sealed on the inside with a foam plug (and, as Matt mentioned, a small vent tube). Resealing inside the pylon is not normally a concern.

Restoring the aluminum anodize is not practical. Just have to live with it.