cooling system?

[30pack]

I checked my coolant in my 96 sl2 and low and behold there was what looked like "crap" in my coolant resevoir. I mean it actually looked like someone had taken a dump in my resevoir tank. Now i have read about oil getting into the coolant ie. "cracked head" but i don't think there was any oil in it. It had orange maybe redish looking sludge flowing thru the sytem. It actually kinda looked like red clay or somethin. Now i guess my question is if anyone has ever seen this happen and what maybe could have caused this? Would this happen if the coolant system has never been flushed? I bought this car in January and it has 107,000 miles on it. Any insight would be much appreciated.
I went ahead and flushed and cleaned the entire system out today along with replacing the thermostat. Believe me i spent most of the day making sure i got the system pretty darn clean. I have had no overheating problems at all or any problems whatsover with this vehicle.