Smoking from the tranny hole?? Starter toast?

[area53 at validpath.com (Jeff Toomasson)]

gawd - that intro could be twisted several ways...  :D

Anyway, I sure many of you have had the symptom where you're cranking and 
cranking and cranking (though I really only remember having this happen on a 
mk1...) and then it feels like the starter's being choked ->  "rrrrtt, 
rrrtttt"  (it's terrible trying to phoneticize (is that even a word?) a sounds 
that the car is making....)

Well after several rounds of cranking, I notice smoke coming from the tranny 
plug hole. At first, my mind went to the clutch, but the PO supposed installed 
a new one right before I bought it (couldn't be more than 1000 miles on it). 
And mechanically it doesn't make a lot of sense. Another few rounds of 
cranking finally brought on what sounded like a gnawing of gears.  I gave up 
because I had to get ready to spend the afternoon w/ the family.

Does anybody have a similar experience where it _wasn't_ the starter?  I have 
a small window to work on cars tomorrow and I'd much prefer to install my 
CD/mp3 player into the M5 rather than troubleshoot this only to find out it 
much more than just the starter...

Hope everyone's having a good weekend!  

Thx, JT