The brown is probably rust. Rusty bearings need to be replaced. Inspecting the cones, and the races inside of the wheel hub, you are looking for pits, or wear grooves, or rust. Rust must be removed. Sometimes old grease is brown, and can be removed. Pits signal the end of the race or cone. A bright line where the balls run is okay. A sharp wear groove where the balls run mean the cone or race is worn out. You will not see dents unless the races or cones are very low quality, and the cones were way overtightened.

All parts should be clean enough to eat off of before you start the inspection or reassembly process.

A bed of grease should be applied to the inner races in the wheel hub. Clean used or new bearings are inserted (use a screwdriver with a dab of grease to position them). Grease is cheap put a generous amount on the cones before you install them.

When you reassemble, rotate the wheel while you are tightening the loose cone, until the cone is too tight, then back it off 1/16 or 1/8 of a rotation AT A TIME, until the wheel can spin, and you can barely see the axle move in or out when you press on it. At that point you are ready to install the locknut. When you apply the locknut, you need to hold the axle and the loose cone stationary while tightening the locknut. After tightening the locknut, retest for the correct amount of play (just enough to see/feel). If the adjustment went off, loosen the locknut and adjust over again. Do this over and over again until correct.

If the adjustment is correct, and the wheel spins and then stops, you probably left some grit in the assembly, and you need to disassemble, clean BETTER, and inspect again.