I have a 2006 Ford Focus 1.6 auto 5 door hatchback with bubbling paint and showing rust where the rear wheel arch meets the body sill. Can this be repaired or do I need a new wheel arch and respray, or a complete sill and wheel arch.
The rust you can see is usually dwarfed by the rust you can't see. A lot of cars have rusty rockers and wheel arches because of the way manufacturers used to construct these parts, which was basically two pieces of sheet metal (inner quarter panel and outer quarter panel) folded together and spot welded. Because it was spot welds, and not a continuous seam, it allowed water and dust to infiltrate into the space between the two pieces of sheet metal. The water itself isn't as much the problem as the dust, which traps the water against the steel, promoting corrosion.
Unfortunately, the correct way to repair rusted body panels like this is to cut out the bad sheet metal and weld new sheet metal in its place. Some cars that have commonly rusted areas have patch panels produced by the aftermarket for this specific purpose.