What causes black like smugdes and specks on the bathroom walls? Located directly around the inside of the window and now appearing along the inside wall. It can be wiped of on the outer layer but stains. What is it and how can it be prevented?

What is it? Mildew. It must be thoroughly cleaned off every surface or it will keep coming back. You need to get a good mildew killer and be sure the room is ventilated as that stuff is not good to breathe and can make you very, very ill. Open a window or a door if you have no window in the bathroom.

I agree with twinkie but one slight terminololgy change. Its mold, mildew is mold on fabrics. Buy a good mildewcide cleaner and you'll be fine. Get that fan going though.

This mold can prove dangerous. In the 90's there were several reports on "toxic mold" growing, particularly in southern states. A mildew cleaner is essential as even bleach won't kill off the roots. All molds require sustained high humidity levels, so follow Twink's advice on getting some air-flow in there. Most bathrooms have a vent fan... I'd suggest using it.

If it's located around the window, then there is a good chance that the window weatherstripping has failed.

The cold air infiltration with the warm humid air inside will create water. The water allows mold to grow.

Usually ventilation is what's required to keep mold down, but I think you have leakage problems. Run your hand along the window and feel for air.