Why does my water kefir smell like vomit?

The sugar was the whole problem and the smell has a name: butyric acid, which is what rancid butter and vomit have in common. Certain bacteria produce it when conditions favour them over the normal yeast and bacteria in the grains, and coconut sugar is one of the commonest triggers people report, along with very dark sugars and molasses.

So something tipped the balance of your culture, and you know exactly what. Plain white sugar is the boring reliable answer.

Do not drink the batch you have and do not use it for a second ferment either. A vomit smell is not an acquired taste.

The grains go in the bin rather than through a reset if you see fuzzy spots of any colour, if they have gone slimy and are falling apart, or if the smell comes back every batch despite the reset. Yours sound salvageable on all three counts.