Someone has been in that gearbox before, and must have had a similar issue.
I think they cleared whatever was locking the two gears, and slapped it back together without changing any parts or even cleaning the debris from the bottom of the gear housing. I found sediment & chunks, followed by a layer of dirt, sediment, & congealed oil, then more chunks & sediment under that. The outer main seal was installed crooked, and the inner axle seal was loose, flopping on the shaft. It is amazing there was no further damage, just some scoring/gouges on the gear case mating surfaces at the mesh point between the gears- already re-lapped. The only missing parts seem to be most of the bearing cage from that one bearing, (no balls missing) and the broken gear teeth. The pivot pin for the axle & mating holes in the frame were pretty worn, so I bored the rear hole to cleanup & sleeved the pin. The front hole in the frame was only about .003 oversize, so I turned down & sleeved the pin.