Yuck. Sounds like the gears are stripped, cracked or broken. You won't know unless you open the transmisison and take a look. It might be as simple as a shaft key stripped to the shift fork bent/broken. I am not sure how available internal parts are or how expensive they get.
Check the transmission input shaft. Make sure it isn't wobbling around.
Best option is to start looking for a used transmission on ebay ect. Joes outdoor power in mi. Ford and Jacobson tractors are said to be the same. You might get lucky and get one for under $200.
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