well it does sound like the valve cover is leaking. also have you replaced the pcv valve? the white sludge could just be moisture. once you take the valve cover off, if you notice the white down on the head, or all over the back of the valve cover, your head gasket probably is shot. dont use the restore stuff either or any oil additive. restore is a bit thinner then most but most all oil additives just foam up and cause the engine to loose oil pressure. id say first clean up the valve cover and seal it back up. check for white sludge, or creamy sludge, in the head.
but now go get the ses light checked out. then come back with the code.