I've taken the 3dr off the road to use as a donor car for the comp car I'm building. I recently brought a 97 300TDI as a work car. Brought it for 4.5k with what I thought was a noisey transfer case. I have a transfer case lined up to swap into it, but now this has happened it seems like it may have been the gear box.
Will let you know what we find in mine, hopefully will have some info tomorrow.