Oil that is violently being mixed with air foams up & whips up into a "whipped cream" looking substance. Once air becomes mixed with oil in a closed system it is no longer a liquid and becomes compressible, which makes it heat up and those foaming/whipping conditions worsen. Oil is no longer a lubricant, nor a hydraulic fluid once air begins to mix with it.
After the whipped air/oil sits still for a while most of the air escapes and an air/oil mixture returns to liquid form... except where trapped in an enclosed space. Damage always occurs as a result if not detected immediately and remedied.
By the time you can begin to drain clean oil for inspection (or pull the dipstick after waiting for oil to return to the sump after shutdown) it will have already returned to a liquid state (motor oil has an anti-foaming additive that speeds up the separation process) so this condition (whipped creamy oil) can only be detected while the motor is running. Sometimes only by cracking open a pressure test tap plug (or using a gauge on it) can it be detected, as is common on automatic transmissions on cars and trucks.
The white oil found in the valve body is your proof. Air cannot separate from oil in an enclosed space, that is why it can be found there long after shutdown.
If that white oil in the valve body were caused by water, water would have to be present and available in the oil at all times... it would never separate. So water would obviously be visible in oil elsewhere, including your drain pan.
You can't blame this condition as being caused by a previously sunk motor either, because oil circulates through that valve body at high volumes and keeps it flushed clean... assuming there is clean oil in the motor. You've changed the oil, so rule that idea out.
So again, white oil found trapped in one enclosed hydraulic pressure system location only, can only mean air is the cause.
As far as taking a guess where the problem(s) might be in your case? I can't. I didn't take it apart or put it together... so no clue.