The rust colored dust was actually coming from the chain itself. I did lube the chain four times and had it adjusted once. When the mechanic lifted it up to show me, instead of hanging down straight, it was all stiff and kinked like an old bicycle chain that had been out in the backyard for years. I'm surprised it didn't snap and feel truly blessed that the Motorcycle Gods had been watching over me.
My only hope now is that after 5,700+ miles I didn't do any real damage to the sprockets (I also have the countershaft sprocket upgrade).
Forgot to mention one thing... while waiting at the dealership I met another fellow Bullet Rider, a really nice guy, aptly named Guy. He had a 2011 black and white C5 that was seriously modified/customized. Guy, if you happen to be part of this forum and chance upon reading this post, do chime in!