Transmission Clunking?, Is my tranny toast? Options

[jordisonjr]

Alright so Im back with another problem and need a diagnosis, or atleast something to look for. So i've had this clunking noise coming from under my 95 gts in the front end, it sounds almost like a wheel bearing. As I speed up the sound gets more intense and speeds up as well. So I thought it was one of the wheel bearings but i had both front bearings done and i looked over them and they were alright.

I recently had my cv boot changed about 3 months ago( yes i know this was dumb but my dad is stubborn and thinks his way is always right) but anyways, I thought that maybe it was the CV joint in the front end. So I took it to a family friend who is also a mechanic and we got it up on the hoist. The axles checked out and were fine. When I had my wheel bearings done one of the ABS sensors were broken and he said that maybe it was the ABS trying to come(this is a different mechanic that did my wheel bearings and screwed up my ABS sensor)

So the car was on the hoist and as we rotated the front wheels we found that the clunking was coming from the differential in between where the two axles go into the tranny. so he got me to jump in the car and run it thourhg the gears and he said thats definately where it is coming from. HE said that it could just be the release bearing is dry. now my question is

-has anyone ever had a problem like this with their car and what was the solution?
-Is my tranny done or do i just need a new clutch

Keep in mind I am running basically a stock 95 celica and any help or advice would be greatly appreciated. I know this was long so thanks everyone for your patience.

-Colin