When the female sago palm flowers, the 'flower', which looks nothing like the usual idea of a flower (they look more like orangy, ferny growths) is situated exactly where the orange fuzzy stuff is in your image, see here http://www.flowersofindia.net/catalog/slides/Sago%20Palm.html. Since the tree is otherwise healthy, this may be the remains of flowering - unless you have a male sago nearby that also flowered, no seeds will have been produced.
Just keep an eye on the overall health of the tree till this has gone; you can wipe away any soggy bits as they degenerate if they are soggy, otherwise, they should just disappear on their own.