I'm going to gamble here and say it is fungus which is all too often part of the rotting process. It is hard to tell from the photo though but the way that the wood looks it is not rot itself. Personally I would trash it. It's not worth the risks of what it could do to your tank and it's inhabitants.
Wood for Aquariums...
I am going to agree with most of the people here that there are certain types of wood to avoid and in my personal book, that is basically anything that has a piece of slate attached to it. The reason is these are woods that in general rot pretty quickly. The type of woods that last well in aquariums are few and far between and mostly swamp woods.
The woods sold as Malaysian Driftwood and African Driftwood are both very different from anything else I have seen. They are very dense woods that do not rot easily. I have been using both for some time. I used to have African much more readily available but all of a sudden Malaysian is everywhere. They are both good and totally different. The African stuff, if I am not mistaken is called Mopani (sp?) and it is the root wood. I have seen it sand blasted and "raw". Both are attractive too. The African wood is a mix of light and dark and seems to last much longer then the Malaysian.
As for curing and drying... Huh? I don't see what role either could play. All you are doing is rewetting the wood. Wood + water = rot, no ifs or buts. Some woods are just more resistant to rot. Teak used in old boats is a great example. Curing is the drying of wood. Now, that would mean the sap is "gone" whether it seeped out or the water just left it and is a film in the wood is a good question and what happens when water is re-added is also a valid question. But I really don't see any reason to think drying or curing will prolong the life of the wood in the tank. It might make a difference on the initial water chemistry effects though.
Wood and Disease...
As for Aquabum saying "If your fish start flashing (like ick), if they bloat (dropsy), have mouth fungus, or they start getting sick for no good reason, it's your wood." That's pretty much an old wives tale from my experience - an easy scape goat.
If you were taking wood from one tank to another with out "properly" treating it, I'd say it is definitely a possibility though. Different things cause parasites and such to suddenly emerge from a dormant state and bring a plague on your tank. Take ich for example; if you have a tank at 78F and drop the temp to 76F during a water change - that is the perfect trigger for an outbreak. But the same can be said for plants, other tank decorations and nets just as well as wood. Anything can carry a disease from one tank to another. Sure it is possible to get funky stuff that came out of your wood - but if it doesn't happen immediately it probably has nothing to do with your wood.
Wood can and does change the water chemistry and that could cause an out break as well if it stresses your fish (never seen that happen personally) or provides the perfect environment for some pathogen (more likely). But removing the wood won't help cure it and it would really be a one time effect. And if it has been some time since the wood was put in - it is REALLY doubtful that is the problem.
Many of the pathogens that are fish diseases are present in your tanks just waiting for the ideal conditions to launch their assault. It's just the way it is. Think of it this way, we are surrounded by harmful bacteria but they don't show themselves until the perfect conditions are presented... Same goes in your aquarium.
Preperation and cleaning of wood...
I have put wood in tanks both unboiled and boiled, soaked and unsoaked. (I personally like the coloration tannins add.) I use wood in all my tanks. Anymore I do boil it for at least an hour. I'm not sure what I will do next time I decide I want an XXXL piece though, it's been a while...
One thing I'm sure of is that bleach is not a good idea. Unless you are very thorough in eliminating it - it will cause irreparable harm or death to fish. I do use it to clean other aquarium items but wood is another matter. It absorbs the chlorine for one thing - how do you get rid of it then? It breaks down the wood and continues to break it down until neutralized (causing accelerated rot among other things). Chlorine bleaching is part of paper plant pulp processing (there are newer non-chlorine techniques now but I do not believe they are used in paper making yet) think about the contaminants and poisons that are generated by pulp mills during this process. How many of them come strictly from the reaction with Chlorine I don't know off hand, but I would never use it myself.