Upon draining transmission oil to do a clutch job I noticed that the oil had a medium brown color - I doubt that is how it should be and might actually be the same oil they put in it off the assembly line.

Of course I will replace it but my question is this: guessing there might be some sludge that didn't drain, should I flush out the tranny with anything? What would be best.

 

I would just change it, drive it a while and change it again. Use the right oil of course... there's a debate about not using GL5 in our GL4 rated transmissions.