[bouncytruck]

My '69 had a gear grinding noise in similar situations. The rear sprag clutch in my TH350 exploded. The sound was the fragments of bearings being tossed around inside the case until one wedged between the case and other internal parts and shattered more internals and cracked the case. I was sitting still in the driveway trying to determine where the noise was coming from - I thought it was my t-case.

I'd check/change fluid in the 205 first. If all looks good, I'd pull the pan in the tranny and look for metal.