Post etching residue - HELP!

I'm reaching out to those far more experienced than I with this. I have a neck knife that I make out of O1 that goes into a kydex sheath (wrapped in leather). The issue is I had one come back with an odd residue that is almost growing around the etching of my maker's mark. I'm not sure if I didn't neutralize the etchant enough or what, but I'm afraid this might happen to all my pieces. Please look at the photos and provide any feedback you might have.

I've uploaded the residue/growth along with a pic of the original product after it was finished and I took the pictures.

I've seen that before....it's a combination of things. O1 rusts if you look at it cross-eyed, so you have to neutralize the heck outta the etch. With it's susceptibility to rust,....even storing the knife in the sheath, with even a hint of moisture (like a high humidity climate) will cause that sort of thing.

Something that I have done in the past that minimizes the problem is to wax down in the etch once it's neutralized and FULLY dry (compressed air works well for drying it out after neutralizing) and once the wax dries you can clean any excess (it'll turn white) out with an old toothbrush. That still won't be 100% effective in all cases, but it will minimize it. About the only way I know to completely prevent it is to do something like a clear Gun-Kote finish on the blade(s).

That's what I was thinking. Thanks for the detailed input Mr. Caffrey. I've noticed that the O1 will rust quite fast when grinding and dunking to cool. I'll make sure I just soak it in a neutralizing bath for a while after etching.