Honda VTX 1300 sounds when clutch is disengaged

Hello guys!

First time posting on the forum and would like to say thanks to everyone ahead of time for their time.

The issue I have started around 1,000 miles ago when I bought the bike. Also note that when I bought the bike the oil looked terrible and in serous need of being replaced ( i had no clue). Anyway, the issue doesn't give me any major problems, but I suspect it will lead there. It happens about 5mins after a cold start (after moving for awhile), and when I stop at lights or idle with the clutch disengaged (or in neutral) it makes a distinct "grinding" sound around the clutch area. It doesn't always happen (most the time it does), and it could be considered rhythmic grinding sound, about 1 second silent and then 2 seconds grinding, and repeat. I'm not sure of what I should suspect but I can say it sounds far from normal.

If anyone could help I would greatly appreciate it.
Thanks, Ian

Edit: I also find it interesting the sound can be stopped for about 3-5 seconds at a time simply by reeving the engine for a brief second past 2000 RPMs, and then continues to grinding rhythmically again for 1-2 second intervals.

Edit 2: I was asked to record the sounds, and I did the link is here http://www.youtube.com/watch?v=JJSzyr_guIE&feature=youtu.be However it didn't record the exact sound but you do get an idea of it (you can tell when it disrupts the sound of the exhaust, even though the video does not show it, it is a grinding sound ). And I also noticed that its not coming out of my clutch area its coming out of my exhaust!!! I was super surprised, being on the bike it sounds like the clutch. This makes me that much worried.

Edit 3: To doug: My clutch lever has a decent amount of play (not to sure what you meen), I squeeze it about 3/4th until the clutch fully disengages, the 1/4th left is free space.

Edit 4: To Hunter: The oil was pretty bad, it had a good 1/2 inch of gas sitting on top of the oil, it felt water based (no elasticity), good news is there was no metal specs in it. I would consider the oil bad enough to say it wasn't changed for 7-9,000 miles (i don't know considering I had just bought the bike). I replaced it with a metal filter and 10W-40 Dino oil. No sign of gas in oil since then (400m) and the bike has 21,000M.

Edit 5: To GonZ: I used castrol GTX dino oil. Just as a side note the noise was happening before I changed the oil.

Edit 6: So I talked to a Bike Mechanic about the sound and he said he believed it was the baffels being "loose" and the bike not having enough back pressure in low RPMs to keep the sound from happening. Anyone believe this to also be the case? Still looking for a few more answers for when I take it apart soon.

Thanks, Wisdo