Grrrr...stupid 4eat. Please help!

[voodoochylde]

Daggone 4eat has bitten the proverbial dust in my 1990 Leg-L AWD. Dunno what's wrong exactly as it gave no warning whatsoever.

Tranny fluid is still nice and pink, smells fresh, and is at the proper level - not overfilled or underfilled. Symptoms are as follows. When I start the car, everything's fine. When I drop it in gear and it tries to engage, I get a horrible grinding and grating noise (yes, dollar-bills are flashing by my eyes). It will still move and engage every gear but if you try to shift it grinds worse and won't engage anything for 15 - 20 seconds. Coasting down a hill, the grinding gets much more severe and even feathering the throttle won't help. Coming up a hill is not quite as bad ONCE it engages a gear. I tried hitting the manual button and selecting 3rd gear. Still pops out of gear when not on the throttle. The grinding noise is constant, btw...it's just worse when going into or coming out of a gear. The quickest I could get her to move is 40MPH (or somewhere around there...speedo goes crazy if it slips out of gear).

I'm not sure if it's the tranny itself, the torque converter, or the CV axle that I know is dying. Any insight would be VERY appreciated.

Edit: I only paid 500 bucks for it so pumping more than a couple hundred in parts makes no sense to me. If I have to dump much in it, I'll sell it and get another vehicle. If anyone's got an Impreza coupe or a Leg-GT for less than 5 grand or so, I'd be interested (just as soon as I can get a loan approval from my credit union).

Edit2 Update: Got a chance to look under my car with it in D and it would appear that my problem may be as simple as a broken axle. I hope that's all it is. I would much rather replace a $60 dollar CV axle than try to beg, borrow, or steal a new tranny or put in a new flexplate/TC. I'll update again once I get time to replace the axle.