Thanks again for the replies guys.
What's Air Filter oil? Just kidding, a buddy of mine has a coworker that did not know to oil his air filter and this guy is a mechanic. Needless to say, he did a rebuild early in the bike's life.
I am confident that it is tranny oil and that I filled it to spec, unless the manual and case are marked incorrectly. I have only owned the bike for a year and the guy I bought it from only owned it a year and never rode it. As the third owner, I rebuilt the suspension last year with a top end on tap for this spring. The bike was basically 100% original when I bought it and I am unsure if it has ever been cracked open. It runs strong, as I ride with a '00 KDX220 and a '01 KTM 250EXC and we are all comparable, except the pumkin will get up and run.
I'm gonna check the seals, crankshaft play, clutch wear and vent tubes when I tear it down in a week or two. Hopefully, this will reveal the cause.