When I opened the top plug of the rear diff, what looked like pancake batter came pouring out! What the hell was that? I know it's not supposed to be filled over the bottom of the plug hole, for starters... I used the rest of the motor oil (didn't use quite 2 quarts in the motor) to "flush" the rear, and I let it drain for a few hours before I put fresh Kawi chem oil in. Will it be ok to ride? Was that stuff just water in with the oil? How'd it get in there?

 

Water came through either the swing arm cavity or the rear axle seals and got mixed in with the oil.
BTW, the KFX REAR gear is not differential type. It's just plain pinion gear (drive) and bevel gear (driven), not differentiating at all just like any other ATV.