Flaming brakes + transmission wtf!?!

[arzueck]

So I'm sitting in the back of my 300td at a dealership , probably going to sleep here tonight.

It all started when I tightened the parking brake a turn or so earlier today. Test drive it and seemed okay and the brake was working, which hadn't been the case since I bought the car. About 50 miles into the 80 mile drive I needed to make tonight, I started losing power, as I'm pulling over to check I out I smell burning brakes. Left rear was red hot, right rear catching fire. Got it put out but that was a scary few minutes.

After letting things cool I fired it up and tested the brakes - fluid leaking out of right rear caliper. I backed the brakes off and Free tow via geico to the nearest dealership. Then when we take it off the tow truck, it won't go into gear!! Not reverse or fwd. nothing. I'm freaking out.

The way he towed it was to lift the front end, put it in neutral, and go with the rear wheels rolling. Is the driveline supposed to be disconnected? Is it possible that he screwed something up?

The transmission was working when it went onto the tow truck because we had to move it a few feet (fwd and reverse). But is it possible I burned it with the extra drag from the brakes?