Pulled the valve cover today anyone ever see this stuff?

Interesting you brought up Quaker State.... the 351C I pulled from the j-yard in '74 had Quaker State labels all over under the hood and it looked terrible on the inside; gunk and crud caked up high an all in the crankcase. (But not the water-caused gunk that the OP showed.)

About 10 years later, I was reading a MIL spec on an engine oil and it explicitly prohibited oils from Pennsylvania bases due to the higher paraffin levels. So my conclusion is that the issues with Pennzoil and Q-S were real. The results may have indeed differed on your oil change habits, engine operating temps, etc. Later PZ and QS moved away from the PA based crudes (presumably as those deposits ran out or became uneconomical to recover) so we don't see any such issues today.