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In the movie Iron Man Tony Stark and Pepper Potts have this exchange when he switches to the Mark II chest piece.
Potts: Oh, there's pus!
Stark: It's not pus. It's an inorganic plasmic discharge from the device, not from my body.
Potts: It smells!
Stark: Yeah, it does.
When he wears the chest piece, the giant hole in his chest is sealed. Where does the inorganic plasmic discharge go? Does it just continue to build up inside his body? That can't be healthy.
The issue comes from mixing the two different meanings of the word plasma:
The colorless fluid part of blood, lymph, or milk, in which corpuscles or fat globules are suspended
And
An ionized gas consisting of positive ions and free electrons in proportions resulting in more or less no overall electric charge, typically at low pressures (as in the upper atmosphere and in fluorescent lamps) or at very high temperatures (as in stars and nuclear fusion reactors)
As one is a liquid, and the other a gas you can't really mix the two definitions successfully.
The best bet I have is that it's a mix of human plasma, and palladium salts (which are ions when is solution) in high concentrations.
Pureferret's answer that it's a mixture of human plasma and palladium salts seems to be the most accurate, seeing as there was no plasmic discharge surrounding the large arc reactor at Stark Industries. This could also have been a drawback to the Mark I reactor due to the necessity of it's creation but the lack of proper equipment to create a reactor core that wouldn't produce this discharge due to possible loose sealant arround the core. Seeing as there was no discharge surrounding the removable reactor in Iron Man II (mark III?) and the Vibranium based core, Tony appears to have corrected that issue.
