My valve cover on the W124 does have "flaky" stuff, and I assumed it to be a sorry attempt at a repaint by the PO.
Perhaps all of that is some sort of factory lacquer coating that erodes over time.
When the head gasket replacement time comes, I plan on having the valve cover polished anyway.
I suppose a stiff wire brush would remove the remainder of the flaky stuff...
2009 ML350 (84K) - Family vehicle
2001 CLK430 Cabriolet (71K) - Wife's car
2005 BMW 645CI (124K) - My daily driver
2012 Mustang V6 (60K) - Daughter's car