I believe it's a jetting issue. I have an '01 300 MXC and have done a lot of jetting experimentation over the last couple of years. With the stock needle, I used to get a lot of spooge out the silencer and also at the pipe/silencer junction. I tried running a single taper needle (CEK) that most people recommend, and that cleaned up the jetting quite a bit but I thought it made the power feel flat. And even with the single taper needle, I still got some spooge, though not as much as with the stock triple taper needle. I finally went with an N3EJ needle out of an '02 Yamaha YZ250 and really like the way it runs with that. I use a 42 pilot, 178 main and the Yamaha needle in the 2nd clip position and the bike pulls hard, doesn't foul plugs and I get no spooge. I'm running Mobil-1 MX2T premix at 40:1 with pump gas. These KTMs seem to be very finicky when it comes to jetting. Once you get them right, they work fine, but it may take you a while to get there. The key to getting them right seems to be in the needle. In my opinion, you can get them reasonably close with the stock needles but you'll never get it right until you dump the stock needle and try something with a different taper. I'm by no means an expert at jetting these things...I just went off the suggestions of others, bought some jets from Sudco and did some seat-of-the-pants experimenting. If you have the time and inclination, I think you can get your bike dialed in and eliminate that spooge.