I think it is just left over from the coolant and the oil/exhaust gases mixing. I saw some orangish stuff like that when I replaced my head gaskets. I don't know if it was as bad as yours since my engine is closed deck and you can't see around the sleeves like on yours.
I just flushed the passages out. I wouldn't worry too much about it but I'm not sure what the best thing for you to do would be.