Taken a few weeks later. Its almost budding like a yeast.
We returned to the spot a few days ago and someone had broken it off leaving an ugly white scar on the trunk. J was very cut up about it but I managed to convince him that it was for the better otherwise the oak would have ended up being hollowed out and this consoled him somewhat (he's waiting to collect acorns in the fall).
Parenting tip: always have a bait-and-switch type explanation handy! (until they get older and wise up to you).
Update. Its an Inonotus dryadeus. Pretty sure of it as its also supposed to grow on oaks as well.