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...

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2009 ML350 (106K) - Family vehicle
2001 CLK430 Cabriolet (80K) - Wife's car
2005 BMW 645CI (138K) - My daily driver
2016 Mustang (32K) - Daughter's car