How screwed am I?
 

I think this is new, pic is showing area just above the water pump, where the passenger side head bolts to the case. I assume this is dried coolant?

http://986forum.com/forums/uploads01...1441750676.jpg

Hard to tell

Are you losing coolant?
small leak in the hose?

I just replaced my WP and I saw dried coolant above the WP. It appeared to have a shaft seal leak and I am guessing it was "blown" up there.

Pressure test your system and see if you have any leaks
Hopefully it's not from a leaking head

Not losing any coolant, no intermix either. I'm not sure if the white area is new or it has always been there but I am pretty sure the white color is originating from the gasket mate between the head and crank case.

Sorry for the picture orientation

Not very screwed. Looks like it is not moving very fast. There's plenty of room for aluminum corrosion on the M96. My engine looked like that all over when I pulled it out. Have to admit I'm always a little envious of pics of spanking clean motors because mine will never be that again. I'd watch it, but not panic.

In general, I too am envious of sparkling clean bright silver/grey aluminum engine pics, however I am talking specifically about the white area in the center of the picture. Looks like an exhaust leak but more likely dried coolant

Looks like dried coolant at the gasket. This could be next to nothing for another 5 years or fail suddenly.

Head gaskets generally don't fail in these cars. Looks like corrosion in an area of dissimilar metals (head gasket sandwiched between the head and block) which aids corrosion. I'd simply watch it.

Use a wire brush to clean off the deposits and check in 500 miles to see if more deposits are there....