When I am coasting my chain will become so slack that it drops well down below the chain stay and rubs agains the spokes, it gets even more slack if I back pedal some. Not only does this play with my mind seeing the chain down in the spokes but when I want to resume power to the pedal I have hesitation due to the chain slack. Is this a rear derarilleur problem? I took a couple of links out which did not help. It is a Dura Ace drive train and a Spinnergy Xero Lite rear hub. Any suggestions? Thanks

Probably a hub problem. If the cassette body has a lot of "drag", you can have this problem. You can test for this by changing wheels.

Most likely, you have excessive friction in the freewheel mechanism. You need to remove the cassette body, clean the pawl area and relube. The cassette body may have a cartridge bearing in the right end that may need replacement.

Your chain length is probably too short now, and you can't safely make it longer. Here's the right way to adjust chain length.

http://forums.roadbikereview.com/showthread.php?p=1288711#poststop

Thanks guys. Great simple test Mr G. I should have thought of that. I think the hub must be the problem.

Maybe the cassette body is repairable, maybe it isn't. If the wheel is somewhat new, contact the people who you bought it from.