Thanks for the replies. I'll do the tests Charlie suggested then take out the front driveshaft and carrier bearing to inspect.

This is a good DIY with pics for a 240D 4 spd but mine is 85 which is different. How to replace the driveshaft support (carrier) bearing - A step by step guide

The FSM is not that helpful with lousy photos and have you removing the exhaust, transmission mount and jacking up the transmission to remove the front driveshaft. Is that really necessary? If anyone have a good DIY with pics for an 85 please post link.

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85 300D turbo pristine w 157k when purchased 167,870 July 2025
83 300 D turbo 297K runs great. SOLD!
83 240D 4 spd manual- parted out then junked