Thanks to all for the additional input. My checklist / action plan is ready to go....

Now I'm just waiting on decent weather. The sleet and freezing rain has moved on, but we're still getting drizzle this morning. I want a completely dry atmosphere when I empty the trunk and tackle this job. There's a chance for clearing by late afternoon today but if not, tomorrow will be dry and sunny. Stay tuned....

 

I should probably have mentioned that the white powder is likely lead oxide, so handle with care and avoid ingesting it. Obviously, it's not correct to just put it in the trash if it is indeed lead.

 

Update:

As several of you predicted, the problem was a missing vent cap on the unused battery vent. I wish I could remember if the new battery came with a vent cap for the unused vent when I purchased it in September 2012. I have my notes along with the receipt from that install and there's no mention of a vent cap. I'm guessing that Pep Boys did not provide me with one and in my haste to install the new battery in their parking lot on a hot September afternoon, I simply missed this part of the task....

This morning I removed the battery, emptied the trunk, and was able to vacuum up all of the white powder using my shopvac. With my shopvac hose being eight feet long, I was able to set the canister well away from the trunk and had no problem with any powder residue flying around - it all stayed in the canister. Then four thorough wipe-downs with rags dipped into a batch of baking soda & water. Then four more thorough wipe-downs with rags damp with just water. Then a thorough scrubbing with 00 steel wool. Then more vacuuming. Then a thorough air-dry in bright sunshine while I drove to Pep Boys to pick up the missing vent cap (no charge, and they profusely apologized for my misfortune) and to Lowe's to pick up a small can of Rustoleum Gloss White Enamel (the car color is Onyx White - close enough). After returning from the stores, I laid down the first coat of paint with a small brush. Only the battery platform was affected by the corrosion caused by the white powder so I did not paint the spare wheel well area (but I will watch it during the next few months and if it begins to show any signs of corrosion, I'll paint it too)....

I'll let the first coat dry for another four hours or so, then lay down one more coat and allow everything to dry overnight. I should be able to reinstall the battery, bolt the trunk fuse box back down, and set the spare tire back in place tomorrow morning....

Thanks to all who contributed to this thread with your prior experiences. I got lucky and caught this problem before too much damage was done because I happened to check the battery cell levels last weekend. All the damage had occured since my previous cell level check, probably during November 2013....

 

Glad you caught it early. I'm changing my battery this Spring and after reading this thread I think I'll do a thorough inspection of my trunk to make sure all is in order, just to be safe.

 

Update:

The trunk components are back in place, the XK8 is freshly washed, and we just got back from a 40-mile test run with the top down on a gorgeous early spring day in the Carolinas. All is well again, but I vow to keep a closer eye on the condition of the battery compartment and spare wheel well going forward....

Those of you with ideal top-down weather today, enjoy....