the sludge may be the factory dexcool that went bad from being proned to air. I'd drain/flush the coolant out completely and refill with prestone yellow coolant or anything besides the dexcool. might as well throw in a 180 t-stat while you're there. also you would need to bleed air out of the system after you're done filling it. the bleeder is on top of the t-stat housing.
try and fill 92octane and higher.
scanner, you can use the Bluetooth OBD2 adapter with torque app if you have a smartphone. another idea is a aeroforce gauge, laptop and hptuner combo, if you can find it on the forums the LS1M scanner w/palm pilot.