What is the brown sludge I found in my breather box and on the bottom edge of the air filter. I have pics I can post if you really need a visual, but it looks like old oil with a lot of rain water in it to me. Also on the same side the sludge was on, the filter was really dirty, we're talking black. There wasn't a lot and it wasn't anywhere else in the plumbing for the intake system.

Your Positive Crankcase Ventilation (PCV) valve is blowing sludge from inside your valve cover.  It IS supposed to vent into the intake - but it might be blowing sludge buildup.  Time to pop open the valve cover and see what is happening.

If there is sludge, I would carefully remove it (no water or solvents!) by hand then do an oil change without adding ANY cleaning additives! 

Additives can loosen up the engine to the point where you'll lose all compression (all the goo is washed out).  With all the goo that might be holding your engine together missing, you might dramatically speed up wear in the piston/cylinder area.

Oh, and sludge is sometimes formed when water is mixed with oil - by a coolant system leak or by "frisky" driving in water...

It may be time for a rebuild.

I had a 64 Chevy with a straight six in college that was packed with goo under the valve cover.  After a bit of cleaning, I decided to switch from non-detergent oil to detergent oil (nowadays, you can't do that - and for good reason!).  Within a couple of hundred miles, the engine loosened up to the point where the compression was so bad  that it wouldn't run anymore!  It's not fun to try to get a college education and keep a POS car running at the same time!

Natually, this being the Internet, I may be FOS.

Any other comments?

I have already changed the oil... and added lucas when I did so. Like I said, it wasn't a lot, just enough to make me ask questions as to who had this thing in the water. I thought someone might have tried using something to clean the breather out and caused it. I did clean it though. with a rag then some warm water and degreaser. I let it completly dry before putting it back in and I am getting a new air filter tomorrow. As for the goo holding the engine together, I haven't noticed a difference in how it runs since the oil change and that was about 500 miles ago I'd say. I already have plans to do a complete rebuild of the engine and trans when I have the time and money, probably in April.

What type of air filter is it? If it's the K&N style oilable filter maybe the PO over oiled it at some point? Possible rain water or just condensation got in there & mixed & created the sludge. I'd clean the housing out & put an OEM style filter in & see if it returns.

M2c,
Fuzz

I thought about that too. It's not K&N but the PO seems like the kind of person that would think you could do that to any filter