"Queen, Queen Caroline washed her face in Turpentine,Real turpentine used to be used as teatree oil is nowadays for skin issues,
Yes I store the rag inside the jar. I do the same with brushes I use with linseed oil in bigger jars.You have to be careful, with turps, though, as it can self combust, if on a rag (though not as bad as linseed oil).
My favourite wood treatment is Beeswax and Teak oil melted together in a Bain-Marie to a soft paste.