I opened up the transmission and removed the layshaft and the gears that came off the shaft. The housing, gears, bearings etc. proved to be clean and healthy. See pics:
This points to the bronze shaft bushing (cedryck/safeairone)! I feel confident with this diagnosis as I had a similar issue with my 109. I tend to overcomplicate things and now that I'm retired I have too much time on my hands. I'm going to button up the trans with new seals and install a new bushing. I'll post an update when i'm done. Thanks to all!