I replaced mine a few days ago, it was 38 years old and looked like it! I had a choice to go with the chrome o-ring like the one in your picture or a nice aluminum cast a little thicker than the chrome one with a little polish it wouldn't make a difference and I just don't trust an o-ring to hold up through the years myself.
Looks to me like something in your water is reacting with the chrome plating. But I'm no expert. Can't hurt to do a nice radiator flush just to be sure, but I'd recommend a nice thick aluminum cast housing.
old housing
new housing
Dan
