With all the great expertise I received, and by deciphering my
german VW Bus manual (!), I was able to get a little further into 
the investigation of the problem. Then it got too dark. Here is the 
progress I've made:

1 - The book said to push the clutch in while at a standstill
    and hold it there 3-5 seconds, then try to engage reverse
    (which is non-synchronized). If it grinds, then the problem
    is with the clutch (as opposed to the transmission I take
    it). It grinds. Good, it's the clutch.

2 - According to Joel's description, since the pedal still has
    a normal feel to it (full resistance), it shouldn't be the
    clutch cylinders or brake fluid. Also, I found no leaks
    anywhere along the hydraulic system.

3 - Found the slave cylinder above the left side of the tranny
    (took a while, I was expecting something bigger :-)  ).
    Following Jim Bryant's advice I had my hubby press the
    clutch pedal while I observed the slave cylinder. It moves.
    Unfortunately, I couldn't identify the clutch lever to see
    if *it* moved. Would it be on the thick or the narrow end
    of the slave cylinder? Or somewhere else? 

4 - Found the shifting rod (the thing that moves back & forth
    when you shift, right?) but couldn't identify the "big nut" 
    which Joel suggests might have come loose. Could it have 
    come *off*? Where should it be exactly? Is this possibility
    still consistent with the findings above?

5 - Harvey suggested that the bolt holding the slave cylinder 
    to a bracket mounted on the transaxel could have come loose,
    in which case the slave reacts when you step on the clutch,
    but doesn't move the clutch lever. Very good possibility. 
    So where's the clutch lever that's supposed to be moving? :-}
    Alternately, would I be able to jiggle the slave cylinder
    with my hand if the bolt has gotten loose?

Finally, the book I have says that if the clutch does not 
disengage the transmission and the test in (1) has been 
performed successfully, then it's either the brake fluid 
or the clutch plate (!) Resistance in the pedal tells us 
it's not the brake fluid, so how would the clutch plate be 
at fault? (Mind you, it sounded like clutch plate, I didn't 
look it up in the dictionary..)

Thanks again!!

Darie
'86 Westy