I just changed my oil for the second time, and I noticed that there is some sludge build up around the oil fill cap and insert. It is brown, dry, and comes off in flakes. Is this an indication that there is a problem with the oil, or is it a designed occurrence caused by the insert? I can not find the reason for the insert either.

 

That can happen if the cap is never wiped down. That part isn't important, look down and into the valve cover, if you see that same sludge there....worry. Lol. The rest of the oil should be...as it should. Anyway, just make sure you do the maintenance at regular intervals...all cars old and new.
I know that's a blanket statement but I followed that with my cars and I've never had problems with my cars....except this 1980 Toyota Supra, previous owners trashed that car and it was just a little too late for her...oh, sorry, back on topic

 

I just got this vehicle fairly recently, it had 100K on it, and it was abused.

I started the maintenance for it and did up the ignition system, breaks, fluids, and joints


I am getting down to doing the bearings and electric/lighting stuff.


the only part that was kept good was that there wasn't any rust.

 

The white creamy stuff (mayonaisse as it is called some times) is nothing to worry about it is just the condensing of hot oil vapors condensing and mixing with moisture.

 

Check this site out and read about the oil sludge,

http://www.daimlerchryslervehicleproblems.com