I had the same issue. It was running fine, then I got an immediate drop in power and horrible quality. I do have a clicking/popping sound, which is consistent with arching, but I absolutely cannot find the source! The link below is a video I caught of it.
Try turning out the lights you should find the arc that way.
Likely places:
- Near the anode end inside the tube bay
- Inside or around the LPS.
Do you have an ammeter on your machine?
Make sure your tube’s cathode is grounded.
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Well, when I turned the lights off it quit doing it. Now I can’t replicate it, and I absolutely cannot find evidence of arching. Being that I’m new, what is the LPS? And yes, I have an ammeter on mine, and I haven’t seen anything out of the ordinary as far as power is concerned.
Does turning on the lights bring it back 
???
Laser Power Supply (LPS).
Usually, when you get an arc you can see the ammeter needle bounce and/or fluctuate.
Now that the arcing is gone do you still have low power?
No, the lights don’t change anything. I can’t get the issue to replicate now. Without the arcing, all my power readings are fine. I did read someone else had an arc at the anode connection and they didn’t find it until they took the connection cover off. I think I’ll try that (after I discharge the leftover, of course).
I still can’t replicate the arching. I still can’t find evidence of arching anywhere. All the connections are good. What I did notice is the light acting differently in the tube. It’s staying a constant shape now. The arching sounds seem to be consistent with the beam shifting in the tube. Is it possible something is going on with the connections inside the tube? I mean I was messing around with power settings working with anodized aluminum when it started, and I was running it at 80% before I knew I needed to watch the meter (didn’t know I needed to keep the needle lower than 20). Is it possible it’s stopped because it settled after running it too high?
This is not an answer to your question, but if you haven’t yet, do read the K40 Intro linked from the header at the top of every page. It has lots of useful information.
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It is so important that K40 owners read the K40 Intro there should be a button for first time posters to any K40 related forum which ask, "Have you read the K40 Into first? Press the Yes button if you have and continue with your post. Pressing the No button will take you to the K40 Intro. 
And those darn digital displays should be banned from use IMO. But they are useful to vendors selling laser tubes and the 30ma milliamp meter vendors.
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