Frank

this is a very common problem with wasserboxers.  i purchased a 1984 with
this very problem.  it was so bad that the transmission would leak about a
half quart of gear oil in a 10 mile drive, from a cold winter start.  once
i pulled everything apart i found as you did a saturated clutch, a
destroyed pilot bearing, destroyed input shaft seal, destroyed
transmission bell housing (oil slinger).  to fix the problem i purchased a
new input shaft, oil seal, and used bell housing from weddle.

the pilot bearing was in such bad condition that there were only two or
three small slivers of needle left, and the inner cage was in pieces.  the
outer cage of the bearing had become fused with the crankshaft from the
heat generated.  needless to say it was very difficult to remove.  after
removal the pilot bearing bore in the crankshaft had to be reshaped with a
diligent filling and scraping.  doing this concerned me but it was the
only option other than a full engine tear down.  i assembled the repaired
system with good used clutch and pressure plate.  i am happy to say that i
pulled the engine and trans last week and the system was in perfect
condition after about 5,000 miles.  the input shaft looked like the day i
had put it together and everything was dry.  kudos goes out to the guys at
weddle for supplying me with great parts and information!

jonathan