According to the player of LittleFox
(who actually invented the foxese language
that most foxes
spoke back in the Good Old Days
of Furry Yore), yiff
was an actual, honest-to-goodness word.
It just wasn't sexual.
See, the concept was to have a language that expressed emotions, rather than concepts. It was also supposed to be relatively easy for people to figure out the meanings of the words without having someone explain it to them. So, a language developed (quite naturally, too, actually) that ranged from blargh (the most negative sound) to yipp (the most positive sound). After a while, people started overusing the word yipp, so a variant, yiff, came into common being.
A while after that, LittleFox was approached by someone who shall remain nameless who wanted to use the foxese language in an adult role-playing context, and said player of LittleFox grudgingly allowed the most positive word in the language, yiff, to also refer to sex.
Unfortunately, this word has been highly abused and overused. It's now primarily used on FurryMUCK, SPR, Tapestries, and other Furry MUCKs, as well as on irc.slash.net, irc.yiff.net, and other Furry-based IRC servers, by young teenage boys who have no concept of sex other than their own hormones.