If the drive belt was off going to the transmission, and it still made that grinding noise and all, that would indicate an internal problem in the engine. I'm wondering what could be grinding in the engine and it still run? Is the Drive Pulley turning? Could be a sheared drive pulley key. Or a loose crankshaft pulley bolt. Makes the pulley grind and slip and yet the engine would run. *shrugs... beats me what it could be. Just guessing