Hi Zatman - your bike doesn't look too bad from what is showing in your first pic above - I would've started by giving it a wash before opening it up. Looks like a needle roller bearing in your swingarm has disintegrated, but I think those bearings should be readily available.
I'm not sure if the Bolt comes in the Bearing Kit but I'd suggest changing that as well.
When I did all the Bearings in this area, including the Swing Arm Bearings, I was advised to change the bolts as well.
It was good advice as there is now no "play" at all.
I now spray that whole area with Lithium Grease a coupe of times a year and it helps keep the moisture out.
Any thoughts on this from other Forum Followers ?
Cheers
Kiwijeff