2002 New Beetle oil

I purchased a 2002 Beetle last December. It is the 2.0L 4 cylinder, w/115 HP. I just got back from Iraq and th state inspector mentioned the oil level. I topped up the level prior to doing a change, but noticed a brown, thick mud like deposite inside the fill cap. What could have caused this? And would there be any problems with running engine flush through before replacing the oil and filter? I am unsure when the oil was changed last. I am hoping that the engine has not been damaged due to this.