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That is probably the nonstick coating coming off the paddle or your breadpan or both. Are there scratches in your pans or paddles surface where you can see the metal under the non-stick coating? If yes, that is probably what you are seeing in your bread. I would tell you to try to get a new pan and paddle if they are scratched, but if your machine is squealing too then you should try to get a new or good used machine as you would end up spending more on the pan and paddle plus repairs to end the squealing, so you should just replace your whole machine. I have some models that are like new if you are interested in buying one. I would have to go through ebay and sell the almost new/new ones for $40.00 including shipping if you are east of the Mississippi. If you shop on ebay you can get one from me or of course others sell them there too.