You are correct. Your problem is in the rear end, not the clutch bearings. The stalling would certainly point that way. I almost wonder if one of the bearings came apart and lodged itself between the bull gear and the bottom of the case. That is not too uncommon with these Ms and Hs. Usually they crack the case so that might not be it or your lucky.
The fact that it spun when it locked up points to this. One side must have had a major problem locking it up. The problem could also be in the bull pinion carrier area. These are also side specific.
I run hytran in my liftall, but either works. They didn't run it back then because it wasn't invented yet.
Good luck,
Scott
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