[MagicRat]

That milky white sludge under the oil cap is a typical byproduct of engines that see a lot of short trips. It's residue from condensation and blow-by gases that get boiled out of the oil when it heats up, on longer trips. This is pretty normal and nothing to worry about. As you suggest, the important thing is to make sure the oil itself is not milky or contaminated.

Before anticipating the worst, I would suggest have a mechanic do a pressure leak-down test on the cooling system to see if its leaking, and, if possible, let us know the results.

If its not leaking, change the thermostat and continue to drive it while monitoring the temp and oil condition.
They are cheap to change and do not last forever. It may be sticking closed, allowing the engine to overheat and boil off some coolant.
This should have been done when the system was flushed, as periodic replacement when the coolant is changed is a good preventive measure.