engine issues

[Alfies bus]

i recently bought by 71 bay it has a new engine with about 700 miles on it i will be changing the oil soon now it has run in, i had a good look at the engine yesterday and found a white/creamy sludge on the inside of the oil filler cap and inside the pancake filter can anyone tell me what causes this, and also is the pancake filter the best idea as i noticed in the bently manual that it is not original, how much would it cost to go back to the old system if that is better.

one more question (sorry)
on the 34 pict 3 carb i have i know that the small screw adjust the mixture and the one directly above it adjust the idle but what does the one that protudes out above those two do !!!

Thanks for looking. Alfie

[Clem]

The mayonnaise-esque sludge is caused by a mixture of oil and water. Nothing to worry about, just the damp air on short runs at this time of year, a good trip will clear it out.
Pancake filters arent brilliant to be fair, but some like them as they allow more space in the engine bay for toppling up oil, removing batterys etc.
A second hand standard filter should be no more than £15.
Yours will be a round oil bath type, and can be messy, but no filter elements to replacement.

[Alfies bus]

Thanks for the advice again clem, i will keep my eye out for an original filter and see how i get on with mine.