[mongocanfly]

its blue nylon...get it replaced if its worn..youll be good to go
supposed to help with vibration and cushions the splines

copied this
That “blue stuff” on the splines of the slip yoke is called Glidecote. The blue, nylon, wear-resistant coating on Spicer yoke shafts helps reduce vibration. The coating is machined on the splines for a tight fit. Slip yokes without Glidecote can be purchased, but they are considered an agricultural shaft and may not balance as nicely but they do offer superior strength. For most, Glidecote is a great way to go and will be found on almost every factory drive shaft with a slip yoke in the shaft. If you have an older driveshaft with pealing Glidecote, the only way to repair it is with a new slip yoke.