How are you checking the oil? The PTO dropping out after a little bit of running suggests to me that you are checking the oil level without having the engine running. When a hydro runs it fills the hydro section of the tractor completely full of oil. The oil pickup tube is between the rear axles. If the oil level is at the full mark with the tractor not running it will be seriously low while in operation. That could explain both of your problems.
To check the transmission/hydraulic oil in a hydro the engine needs to be running for at lease two minutes before you check the level.
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Today's Featured Article - The Day Mom Drove the 8N - by Brian Browning. My Dad was wanting to put in a garden but couldn't operate the 8N and handle the old horse drawn plow he had found and rigged up to use with the tractor. Well, he decided to go get Mom out of the house and have her drive the tractor while he walked behind the plow. You got to understand that while my Mom is a hard worker who will always help whenever she can... she had never operated farm machinery before that day. Dad got her out there, explained how the clutch was the same as in our o
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