Shower Drain Leak

I have a bathroom that was hardly ever used. The house was repiped with copper about 16 years ago. Finally moved some tenants in and they are using this bathroom but they are complaining about rusty water coming out of the pipes (at first) in this bathroom. The problem is isolated to this bathroom. I flushed the tub, shower and vanity faucet before they moved in and thought that did the trick. A lot of nasty stuff flushed out... little pebbles (rust maybe) and brown water at first -- It takes a couple of minutes to fully clear. Another plumber friend really believes that there's some galvanized piping somewhere, but there is not. What do you think could be causing this? Does Los Angeles city water have debris like this that can collect? Could there be something lodged inside there or do I just need to give it some time to clear out? Should I just keep telling my tenants to be patient?

I replaced tub diverter/spout with universal kind. On the bottom of it (looking at it installed on wall) there is a notch opening. I assume its where you would be able to get at the hex screw if installed that way. If you look up at it from the bottom you can see the copper pipe inside. Can you picture what I am describing? Anyway, I had a tiny gap around the spout which I applied clear caulking to. But on the bottom is that notch which I did not seal. Should I caulk that as well?