Been using Watco Walnut Oil - that's it.
I brought it back from the the guy who glued and planed it, he ran it through the HUGE belt sander a bunch of times, it was pretty smooth - but not sure of the grit. I got home, wiped it down, then applied some Walnut Oil, maybe 3 times?
Since then I've sanded it once with 400 grit, and about to wipe it down with some tact cloth. I haven't put more on yet..
When you say "wiped it down", I'm guessing this was with a tack cloth. IMO, these tend to leave a sticky residue if you're not careful. After finish sanding (120, 150/180, 220), I prefer to either wipe it down with a dry swiffer pad and/or a paper towel wet w/ either alcohol (DNA) or mineral spirits. Then let it dry completely (which is fast for alcohol and takes an hr or more with MS depending on the conditions). You can also look for sanding scratches that you may have missed during this time as they will be readily evident. During finishing (i.e. scuff sanding between coats), I absolutely avoid tack cloths as the stickies are unfriendly.
When you say you applied Watco 3x, was this according to the manufacturer's recommendation of flood, let sit, then wipe it off? Should be fine. How long did you wait between applications? Was it fully dry or still tacky? Also, note that Danish oil is not a film building finish like a varnish (i.e. polyurethane). It's an oil varnish blend so it's not really meant to build up via multiple coats, but instead give that "in the wood" feel. I agree that I'm not sure it would be durable enough for a desk top, YMMV. I'd also go with the wipe-on poly. Howard Acheson has a nice writeup on this.
http://www.ncwoodworker.net/forums/showthread.php?t=39386&highlight=wipe+poly
For an oil/varnish, usually 2, but no more than 3 coats should do it. I wouldn't sand in between unless there were some dust nibs I was trying to pick off and then I'd very gently wipe w/ 320 or 400 about as hard as I'd rub my bare skin with sandpaper. Wipe the dust off with a swiffer or dry paper towel. As to the "silver sheen":
1) remaining dust from the sander, but if you wiped it down, this should be minimal
2) pores not filled. This is a personal preference IMO, but won't cause the silver streaks you're seeing. I don't fill the grain in walnut, and I don't see this effect.
2) poor surface prep due to low grit final sand (i.e. 120 grit) rather than following it up to 150/180 and then 220. Look for sanding scratches. that said, this would not cause you're problem but rather would just leave scratches that are accentuated by the finish.
3) Finish not fully dry before applying another coat. This has a whole host of problems that an anxious finisher like myself has screwed up more than once. Thinned finishes help here. If it's tacky walk away til it's dry (i.e. not tacky). Use the pinky test (i.e. touch it with your pinky finger)
4) Sanding through the finish. I learned not to do this the hard way. Does the finish look level or do the "silver streaks" appear to be low spots w/ less finish (which may also be evident by the sheen on these patches)?
5) Are you flooding the finish on and "working it in" i.e. don't just brush it on, but swirl it round and round, back and forth to make sure you get an even coat and good penetration. I like a tri-folded paper towel or a piece of old T-shirt. Some areas will absorb more than others so keep adding it til it's even. Then of course wipe it off after about 10min and then check thereafter for any seeping out. Also, if there is any dirt or oils (or tack cloth stickies) on the wood, this can interfere with the application.
HTH,
Sam