My 49 Cub p.t.o. runs both in the on and off position. In the off position it isn't just free wheeling. The movement of the lever makes no difference. It also makes a noise (grinding) in the rear area of the tractor. It isn't continuous and more when in 3rd grear. I am almost sure the noise isn't coming from the tranmission. I appreciate any advice.
 
I would start be looking inside. Take the top cover off the transmition to see what is going on when you move the lever.Does that small gear move? With the tractor in neutril can you turn the PTO shaft by hand?
 

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