Thanks everyone for all your responses!
After I took the pic and put up the post, I re-filled the cooling system with actual radiator fluid so I could actually see the level in the overflow tank and monitor what was going on. I've been running it for a few days now and it looks to me (I've been through a few water pumps in my time) that although too not bad, but its starting to go.
The overflow tank has less and less coolant each day. So I'm guessing a small leak through the shaft and seal.
My initial cause for concern were the black specs in the coolant, but I think both HeatXfer and Orangcicle are right. It's the rubber coolant hoses deteriorating.
The Samco Hoses are over $200 with shipping!
Checking with cheapcycleparts, the OEM hoses total to just $100ish. My OEMhoses lasted 8 years and 76K, so I think I'll save the dough and replace with stock.
Now the milky white fluid. I did let it set, and it did not separate. Nor was it greasy to the touch. We do have VERY HARD water here in LA, so I'm letting my concern go for now. I'm taking The Griz's advice and doing a flush with white viniger water and distilled water.
It makes sense to me that after 76K there would be deposits throughout the cooling system. Time for the flush, new hoses and water pump.
I don't see the CJ design;s water pump shaft on KTMtwins anymore. I did find it at dualsportwarehouse for $150. He makes great stuff. The cluch basket I put in 4 years ago shows no wear whatsoever. I absolutly recomend the basket upgrade if you find you are running through clutch baskets like I was.
Again, thanks for all your input and advice. As soon as I can I will post pics of my next coolant drain (hopefully and evening this week).
I know, Very exciting. :)