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John,
Glad to see you are back to working on your boat. I have been rebuilding hydraulic cylinders for years. Not much to it. The pitting is probably from corrosion and may leave a leak. Emory cloth knocks down the build up. Will still work and might get an annoying drip. The white from water is common from condensation (sitting) and might burn off as the oil heats, probably best to flush the system. Either the rod cylinder is held together by a snap ring or is threaded. take off the snap ring or unscrew the top. Leave the bottom of the cylinder intact/in place and give a yank on the rod. The whole assembly comes out. Write down on a piece of paper the order of assembly as well as the direction of the seals. Remove the top nut of the rod assembly and replace with a rebuild kit. Put back together. A rebuild kit for that dinky cylinder cannot cost that much. I have scratches and dings on hydraulic cylinders form the 70's. Still work just fine. Leaking is from wear on the rod as well as the interior of the cylinder. Pitting more annoying than anything. Pumps generally howl when they go out. Valve leakage usually is displayed by movement of the motor when everything is shut down or movement, without leaking. Pumps and valves, for me, are shop work. Good luck.

Garris

Yes, after sitting a little air may get in. Keep working it SLOWLY back and forth and it should come back