sludge in coolant

if there is sludge in your coolant there are a couple things to check here. try to figure out if it is engine oil or transmission fluid. it can be either, if it is transmission fluid then it is a broken cooler line in radiator if not have it pressure checked for a blown head gasket or intake gasket. If you see a sludgy/whitish buildup under oil cap then you probably have a head gasket problem or crack in head/engine block. more likely a head gasket however.

It also could be Dexcool gone bad. That turns into a red clay.

The head gaskets were replace two years ago, i am wondering if they need to be re-torqued

I kind of doubt it, that should have been done when gaskets were replaced. pressure check it first.