Yes, it is called rust; it is the typical oxidation product of iron/steel. Your pipe is rusting and will eventually fall apart.

Two incompatible metals were joined and are reacting and as noted will fail. Now? After you move? When you are on vacation? Who can say.

Done wrong with metals that do not work together you need to have this redone properly and I agree if you don't it will fail when you are gone.

It looks like an active slow leak (drip squeezing out every so often). You can see the dropping on the wood plate below and the blueish minerals at the joint on a fairly new valve for the PEX retrofit.

Looks like it is a galvanized pipe elbow coming through the wall, with a pipe nipple to a new Sharkbite Ball Valve FNPT to mate to the galvanized nipple. That thread connection would need taped/doped for a good seal. I would bet that the galvanized was already somewhat rusty prior to changing the ball valve, maybe there was copper before (the black on the wall could be from heating a joint) and didn't use a dielectric union.

I would want it fixed prior to closing the wall up.