New flows and instabilities are presented for a ferrofluid drop contained in glass Hele-Shaw cells with simultaneously applied in-plane clockwise rotating and DC axial uniform magnetic fields. When a ferrofluid drop is stressed by a uniform DC axial magnetic field, up to ~250 Gauss in 0.9-1.4mm gap Hele-Shaw cells, the drop forms a labyrinth pattern. With subsequent application of an in-plane uniform rotating magnetic field, up to ~100 Gauss rms at frequency 20~40 Hz, smooth spirals form from viscous shear due to ferrofluid flow. If the rotating magnetic field is applied first, the drop is held together without a labyrinth. Gradual increase of the DC axial magnetic field, to a critical magnetic field value, results in an abrupt phase transformation from a large drop to many small discrete droplets. A preliminary minimum magnetization and surface energy analysis is presented to model the phase transformation.