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If the residue is red, it is from an additive, not the walnut itself. I'd tumble a half a dozen used dryer sheets to remove it from the media and then use liquid car wax as an additive.

The use or clean question is more difficult... Tough to say from here what the additive is. The red color leads me to think jewelers rouge, a very fine abrasive. I would not worry about running a few hundred to a thousand of those through my dies, but would definitely get rid of it for long term use.
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