1987 260E Fan Pulley Touching the Metal Frame ?

[saumil]

My 1987 260E started making some grinding noise and metal flakes were all over the front area of the engine. I looked at the fan pulley carefully and its surface away from the radiator (towards the engine) has become shiny indicating that it is contacting some metal frame. Also the fan blade is toughing the tensioner pulley and some other metal part towards the bottom. It appears that the whole belt/pulley system has gone out of alignment. What may be the problem ? Could there be a problem with the belt tensioner mechanism, I am not sure how it would make the fan pulley go out of alignment. Apparently, I could push the fan clutch and or the pulley towards the engine and by doing this there appears to be a descent gap between the fan pulley and the metal frame BUT the clutch/fan pulley dont stay back and they bounce right back and become misaligned. Like the belt is doing something to cause the problem. Or is there a problem with the fan clutch or its frame, though I dont know what and how this can happen. The fan turns just fine.

Thanks !!