The exhaust is mixed with water in the midsection, there is unburned oil and gas and it mixes with the water, this gunk is thick and sticks inside the housing. After the motor sits for a while this gunk starts to slowly run down out of the exhaust housing and forms that ugly mess on the motor and floor.
Some oils create more gunk than others, and running at low RPMs may cause more of it, so will a bad thermostat that doesn't let the motor warm up completely.
It's very common, and normal.
There is a slight chance it's gear oil, gear oil smells bad, oil and gas smell like, well, oil and gas.
