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I was adding grease to the various fittings under my truck when I noticed on the passenger side some rusty water coming out. I believe this is from the upper ball joint. I gave it a few extra pumps with my grease gun to try and get the brown looking grease out but I am wondering if this is a sign of a bad ball joint?
Well .... water/debris does not belong inside a joint. Something has failed, and has allowed it to enter the joint .... to some degree. I would say your ball joint is in the process of failing. Maybe I'm wrong.
Movement in the joint shows a bad ball joint. Jack it up and look for movement in the joint. It can sometimes take a lot of force to show movement in a joint that is just starting to fail .... a six-foot pry bar putting pressure on the wheel/tire.