Oh my, Tracie. I'm not sure I can help rescue your fiber, but I might be able to give you some pointers for the future!!
What fiber did you dye? What method did you use...did you dye it in a giant pot?
Okay, first: What do you mean by "hard fiber?" Does it feel hard to the touch? Or have you tried spinning it and discovered that it's hard to draft?
Kool-aid is fine to use for dyeing. To achieve a medium shade for 4 ounces of wool, you'll probably need 4 packets of the sugar-free color(s) of your choice.
There is citric acid present in the Kool-aid, which is important for the color to adhered permanently to the fiber. Citric acid changes the chemical structure of the wool and allows it to accept the dye colors permanently.
Food coloring is also fine to use (in case you decide to experiment in the future!), just be sure to have access to plenty of distilled white vinegar. You'll need approximately 1 cup per 8 ounces of wool, although I've heard more or less depending on the source.
Now, to address the hair conditioner issue. Yes, adding conditioner will make wool soft again after dyeing. However, it's best to add the conditioner to the water_first_before adding the wool. This will dissolve into a solution and thus be more homogenous instead of clumpy. Otherwise, you might have a tough time rinsing it out (and it'll make the wool feel lotion-y while spinning). Fabric softener is best. :)
Rit dye should only be used to dye non-natural fibers. The reason why you probably had so much red dye coming off the fiber was because of the way those dyes are created. Rit dye is actually multiple different kinds of dye mixed together in the same bottle. Each of the kinds will dye only a certain type of material, and if what you're trying to dye isn't one of those types, the dye sits in there being useless. So, there's a lot of wasted dye. (Commercially dyed man-made fibers are horrible for the environment for many of these same reasons).
How much squeezing/pressing did you do to the fiber during the dyeing/washing process? Fibers that you plan to dye should be treated like finely blown glass figurines--no joke! When you're getting them wetted out for dyeing, be sure to use a gentle up and down motion with your hands. No agitating, no swirling or tossing, no pressing hard or squeezing. Because the wool hasn't be spun yet, it will wet out much faster than yarn will because it has more trapped air.
While dyeing, try to keep the swirling to an absolute minimum. I take an old cooking spoon and dip it under the fiber and gently turn the whole mass end-over-end. If you're dyeing multiple colors in the same pot, keep the poking and proding to a minimum, especially while it's hot.
So, I'm sorry I don't really have an answer to how to fix your problem, but it sounds to me like you felted the wool. If you're having trouble drafting the fibers for spinning, or you hear ripping sounds, that's a good indicator of felted wool. I'm speaking from experience. :)
Others, please feel free to correct my reply. Although I've been doing this for a while now, I'm not infallible. :)
