I live in Melbourne so the water is not too bad I hear? I ended up taking the machine to 9Bar Espresso Services here in Melbourne. They have a great 24 hour turnaround, so I got them to check it out and service it / change the seals and all that kind of thing. Today testing out the machine no white flecks at all, so wherever it was coming from it seems to be gone now.
Now the plans are to regularly backflush / descale to hoepfully prevent anything like that ever happening again.

Thanks everyone for the help.

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