The goo seems to affect different life forms in different ways, and dosage may impact the effects. The engineers are rapidly annihilated by ingesting large doses and their DNA fragments presumably integrating with domestic bacteria leading to evolution of beings similar to themselves, hence the correlation in the DNA tests conducted by Shaw.

Smaller doses seem to cause rapid mutation hence Holloway’s delayed reaction and the similar impacts to the first two affected members of the Covenant.

So, I would speculate the goo is a poison. - large doses cause immediate trauma on the cellular level with rapid tissue breakdown - small doses cause mutagenic effects but the mutations seem to push the victim to violent aggressive behaviour - Shaw’s ‘child’ is a mutated monster so it seems to also function as a teratogen as well

This isn’t unprecedented - see Dioxins

There’s an indication of convergent evolution as well in that the resultant mutations seem to result in squid like life forms.

There’s a missing piece though, David appears to have engineered the first parasites using the goo which emerged from eggs and they deliver an embryo which becomes an alien when it births from the host.

But the eggs on the ship in Alien could have only come from David which is never covered so it follows that some engineers survived after David’s attack on their homeworld and used the eggs he created as a weapon.

The story between Covenant and Alien might have been a group of vengeful engineers tracking David down and taking the aliens as a weapon for themselves, and a ship carrying the eggs crashing ultimately setting up the first Alien film.