There are two gears inside the tranny tailcone. The drive gear is kept from spinning on the tailshaft by a little clip under the gear that you can barely see - it fits in a slot in the inside of the gear. The driven gear is the one with the square hole in the end that fits the speedo cable.
If you spun the speedo cable and the needle moves then the problem is definately one of these two gears. You can pull the driven gear out and try to scope any damage with a flashlight.
To replace these gears, pull the driveshaft, then the tranny tail cone. I bet you'll find a stripped gear or the clip broken on the drive gear.