Was doing minor maintenance and filling windshield wiper fluid / break / power steering fluid etc.. until i poped the cover to discover this.. should i be concerned? looks like its grinding on something to cause it to strip like that?

 

How many miles do you have on it? Might be time for a replacement.

 

i have ~31,180 miles on

4got to mention, one morning when i started the car, it sounded a little louder than usual, made a somewhat loud squeaking sound but i thought it was just from the cold start. Eventually, the sound went away after 10min warmup

 

something is damaging that belt, you should check out and see what's doing it. that belt is far damaged beyond 31k

 

i checked around the pulley everything seems to be fine?

 

I have over 90000 miles on my 05 and it doesn't look like that, mine is just a little brown since it time to change it soon. You should have it replaced since you are still under the original warranty period.