Hello,
Yes, quite a rare failure years ago, but becoming much more common in recent years as these cars reach the age of 50. i just replaced another failed one a few days ago. The diaphragms are not expensive, even from the dealer. They are a bit hard to find at the moment, since demand is up. I suspect stocks are running low. At some point more may have to be manufactured and the price will triple!
When the failure occurs, a rupture in the rubber diapnragm allows transmission fluid to be sucked into the intake of the engine via the transmission metal vacuume line. Smoke can be seen from the exhaust, shifting problems can occur from the leaky rubber diaphragm. The number six spark plug may become fouled and the transmission fluid level will decline. In some cases the translucent plastic brake vacuume booster line may begin to turn red from transmission fluid migrating to the engine intake.
The problem is usually mis-diagnosed as something else much more costly.
The rubber diaphragm can be replaced without removing the transmission or the transmission mounting plate. In this instance the exhaust system is being replaced, and off the car, making access to the transmission diaphragm even easier. However exhaust removal is not necessarry.
The metal vacuume line is disconnected at the modulator and the three 8mm bolts are removed holding the modulator cover in place. The modulator cover, spring and diaphtagm are then easily removed. A rupture in the rubber membrane is apparent after holding the diaphragm up in front of a light. A new diaphragm is installed and the cover re-installed. In this case the factory lead seal and wire are still intact, showing that the modulator adjustment has not been tampered with since leaving the factory.
Be sure to check the transmission fluid level before the first test drive. Also, the un-burnt transmission fluid, which has collected in the exhaust system may take a little driving to burn off.
This is a nice preventive maintenance procedure to do, especially if your transmission is out. There is also a paper gasket and rubber o-ring behind the modulator unit that is nice to replace if the transmission is out. These items do not fail but may prevent a leak at some point. If you get into this "advanced procedure" pay close attention to the orientation of the cylindrical slide valve/ copntrol rod unit, during re-assembly. Just replacing the rubber diaphragm can be easily done in an hour or less. going further and replacing the o-ring and gasket will take more time and ability.