Sorry to say you have probably lost some teeth off a pinion in the transmission.
In theory, you can tear it down and rebuild it, but parts are hard to find (particularly now, as Peerless are in a state of flux following the folding of associate company Tecumseh), and ruinously expensive if available.
Only sensible option is a replacement transmission. There are some around (at the moment) - if you need a quote drop me a line with the numbers off your existing unit.
phil_saunders@bigfoot.com
Phil Saunders
February 2009
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