Nate,
That is dust inside the intake hose. I HAD grease on the rubber ends, and had PLENTY of oil in the filter media itself. Hold it up to the sunlight, and you can see daylight thtrough parts of it- that tells me it CANT filter as well as it should. After two bad filters, and one new one being sent directly from K&N, and STILL having dust inside the intake hose, I gave up. Out west, where it is sandier, the one currently in Mom's pickup does ok- no dust inside the intake. I have the paper filter on mine right now, and the intaek hose is as clean as when I last cleaned it. I will put a paper one on Mom's as soon as I get the $20 for a new one.
MMiller- I live down 3-4mi of gravel, depending on which direction you come from. When I was in Colorado, I was down 4mi of gravel, but it was more sand than dirt. The dust around here is about as fine as baby powder, but dont smell as nice. Funny, my truck wasnt in near as bad of shape out there going 50mph on the gravel as it is here going 20mph on the gravel. Welcome to the swamp!!
-DP