Well, the "engine" appears to be fine!!!  Good news here, lead down
completed, and no signs of any internal damage.

The failure was contained to the Auto Trans Flex Plate and Trans.  See
photos.

Initial hint of the problem was a "clicking" sound upon acceleration,
sounded something like a heat shield rubbing.
It actually was a loose and over flexing flex plate, going from reverse to
forward put more flex than it can handle,
while it was loose.  Our friends should have canceled the trip to have their
van looked at.  But, we ALL had our
sights on Buses by the Beach, and discounted the "clicking" too much!

So, on our way to Ludington Michigan State Park (we drove our 84 Westy, our
friend followed in their car with their tent!),
we stopped to take a look and photos of their Trans and Flex plate.  The
center of the flex plate blew out and the trans
case bell housing cracked and bottom broke out.
http://www.flickr.com/photos/77623993@N00/4678733822/in/photostream/
They are going to have a rebuilt trans and new flex plate installed by the
shop where their van is in Grand Ledge MI.
It should be done and back on the road this week.

Thanks to everyone who provided insight and guidance on this topic.

Jack R.
84 Westy Wolfie, 2.1l 4 Speed
on behalf of
Chris & Bob
90 Westy 2.1L - Auto w/flex plate & Trans issue.