I learned the lines as "how white the spray is"
The Minch is the sea between Skye and the Western Isles (outer Hebrides). I suspect it is a generic word like The Kyles (from Gaelic "caol", a narrowing, a strait), but I can't find it in the available dictionaries.
Mingulay is south of the island of Barra and is no longer inhabited. The name as I've heard it sounds much as you'd expect from the spelling, not at all like "Minch Gala". -ay is a Norse ending meaning island, as in Vatersaigh, Pabbay, Eriskay, Berneray. When Gaelicised, the -ay is usually spelled -aidh or -eidh. Sometimes the y sound is dropped, as in "Bernera" or "Islay" (the y isn't pronounced), a partial explanation for Ian's pronounciation. I found "Miugulaidh" on a Gaelic map, with no "n" sound at all
You'll find a sound sample with the text of the song at: http://web3.foxinternet.net/celtnots/Mingulay.html The article offered by katlaughing is about Lewis, considerably north of Mingulay. You'll find a bit about the song in another article from the same on-line magazine: Barra article