Anyone have an idea on the likely source of a leak between the bellhousing the transmission. It drips straight down, whether I drive or don't. Doesn't seem to be going into the bellhousing.

Oh yeah, its an M20.

It is probably the lip seal, but it could be the gasket

Hello Rogue 68, Probably your leak is coming from the countershaft pin, that is located underneath the input gear ( 4th ) and the front brg. retainer. This is a common problem with muncies as the case stretches as the input trys to push the cluster gear down upon abuse or age. The fix is to have a machineshop install a steel bushing into the case. The pin should have approx. - .001 to .0015 interferance fit. ( Press fit into the bushing ) Tell who ever machines the case to dial indicate off the top of the original case hole as there is no wear on the upper half of the hole . You do not want to move the countershaft bore down as this will result in to much backlash with the cluster gear and the input 4th gear. You could also purchase one of the new Muncie Super Cases, unless you want it to look 100% original. Hope this helps.

I agree with rszmjt... it is probably leaking from the countershaft pin. I just rebuilt my M20 earlier this year and found that whoever did the rebuild prior to my ownership used a cheap rebuild kit and the countershaft itself was the problem, not the case. The countershaft is suppose to fit snuggly in the case and mine would slide through. I had already ordered the rebuild kit from Paul at www.gearzone.net (http://www.gearzone.net) and when the parts arived I tried the new countershaft and it fit perfectly. My car has been back on the road now for about 4 weeks and hasn't leaked a drop of fluid. :cool: