I have a 1997 Xj 4.0 5speed ax15. I purchased the Jeep in 2017 and began my lonesome journey in the Jeep world. In many ways I am still very much an amateur when it comes to my auto knowledge despite all the repairs, conversions, and upgrades I've done to my XJ. I only learned what I know from youtube video repairs, limited forum research, and self-diagnosing. So far it hasn't let me down, but I wouldn't say I'm confident in knowing how to identify issues, even after I've already repaired said issue unless it's very common maintenance.

Current problem: I replaced the clutch with the LuK Clutch kit, part # LuK-05-065 from Summit Racing back in 2018. I wanted to replace the clutch because I was hearing a whining noise at idle and low speeds when accelerating and my half assed research brought me to that conclusion. The whining noise still remained but everything else seemed to work fine after replacing the parts so I just shrugged it off until now. In hindsight, it is likely the power steering pump pulley/bearing that is making the noise but that's an issue for another day.

This weekend I took an 1hr/15 min drive to an event, then another 1hr/15min back home around midnight. When I was 3 miles from home on the highway I had trouble shifting, probably in 3-4th gear. After I was able to get through those gears I finally got into 5th going around 60mph continuing my drive when I suddenly heard a loud pop followed by a loss of engine power. I coasted to a stop finding an low traffic lane to pull over to. When I came to a stop there was slight smoking briefly coming from the hood along with a burning smell. Shortly after a state trooper pulled behind me and pushed me into a nearby gas station. I got towed home and after further investigating, I've somewhat narrowed down what I believe may be the issue but wanted to get some advice or thoughts on what it could possibly be before I crack open the bell housing.

Here's what I know:

1. The engine will still start but when I release the clutch pedal, it begins to stall, even in neutral unless I press the clutch pedal down again.
2. I can shift into gear smoothly (with engine on and clutch pedal pressed down only, with the exception of 3rd gear, like at all. I can get into reverse but there is quite a bit of sticking before it catches.)
3. I attempted to reverse out of my driveway to see if the clutch would engage. When giving gas and releasing the clutch pedal, there is a delay with an eventual catch followed by a firm lurch then suddenly no reverse and stalling unless I press the clutch pedal back down.
4. There are some droplets of leaking fluid in-between the bell housing and the dust shield after attempting this and a slight burning smell but nothing more after that. This could be another issue not related as there has always been a leak here but from when, I cannot recall. The only difference is that it is slightly more leaking after performing above actions.

This might be a dumb way of diagnosing the issue, likely causing more damage, but I am at a loss with experience when trying to figure this out. I've maybe put on 20-30k miles since replacing the clutch back in 2018.
Any thoughts or advice? Does this issue sound familiar to anyone? Is there something I can check out before I dismantle the transmission? Any help is appreciated! Apologies if my articulation skills are so-so.

 

Have you ever checked or replaced the transmission oil?

I would bet that something in the clutch system broke or something broke inside the transmission. Those drops of oil are probably from the rear main seal or the output shaft seal of the trans.

 

I was going to check the trans fluid levels once I had more time. I flushed and replaced the trans fluid probably around the same time I changed the rear diff, axle bearings, rear disk conversion, and the clutch as well, give or take

It was a cold one yesterday so I did limited crawling underneath the jeep. When I replaced the clutch back in 2018 I also did the rear main seal. Figured I'd replace it at the time since I was dropping all that stuff anyhow. I'm not so confident in that repair but I remember tapping that seal in, praying that nothing messed up. The leak still remained but lessened. I kinda gave up finding that leak lol. I did the other gaskets as well (oil pan and valve cover gasket) too. The only other option I'd have guessed was maybe a small leak at the oil pressure sending unit. My oil pressure gauge was and is still is messed up, works only half the time, and is gunked up with oil. How this this thing has gone for so long with all this leaking is beyond me lol. Tbf I don't drive very far even tho I daily the jeep so that might help.

Output seal shaft, I'd have to consider that as well, thanks!