His sheath was very clean - dirty penis but clean sheath. Ok, here's the scoop.
Male horses secrete a lubricant from their sheaths called smegma.
Some horses produce a lot of it while others seem to have very little - it's all on an individual basis. It can collect and get trapped in the groove around the urethra. If allowed to get too large, they can shut off the urethra. They can also cause infections making the sheath swell and again, cut off the flow of urine. It is important to check them every so often, but you don't want to clean a sheath too often.