Please help me identify, or at minimum help me to figure out if this what I think is a sponge is good or bad and wether I need to remove that bad boy as soon as possible or let it be. Thank you so very much to anyone and everyone who offers any assistance at all.
That sure looks like a sponge. Good or bad is usually difficult to determine but in this case, it will likely be harmful to the hammer as it continues to encrust it. I'd remove the sponge but also understand that it has the potential to release toxins as it dies.