I think your guess is right. From the code and appearance, it should be: an unpolarized, 100nF, ±20% tolerance (from the "M"), 50V capacitor. That form factor is not unusual for older capacitors, and the physical size makes sense for a 100nF 50V cap.
Also, if that "8502" is a date code, that would be January 1985!
To verify (or at least narrow down) whether it's a capacitor or not, you could check resistance in both directions. If there's no conductivity in either direction, it's very probably a capacitor. If not, then it's either a broken capacitor or something else entirely.
Edit: For completeness, a datasheet search for "K25U" turns up a couple things:
- K25UF, a 3A, 2.5kVrwm diode, axial package, from Voltage Multipliers, Inc. Highly doubt it's this.
- A series of ceramic disc capacitors, safety class X1/Y2, part no. SxxxK25U2MS6.K7. Package doesn't match.
- Semikron SK25UT, an 800V thyristor module. Definitely not that.