Jeff and All,
I have completed replacement of the speedo drive seal. It went pretty much as Dan described, but I have added way too much verbage and a couple of pics.
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The closing plug is on the outside/top of the rear transmission cover. If you want to do this with the trans in the car, the rear cover has to come off. Watch out for the thin shim washers that are used to control bearing end play. Also drain the 'box lest ye drown in ATF.
Pry out the closing plug with two screwdrivers; the plug is maybe 5-6 mm long. Under the plug you'll see the end of the speedo drive shaft. Measure the depth of the hole to the top of the shaft. In my case, it was 0.255 inches.
The speedo drive shaft is a tight press fit in the speedo driven gear. Mark the gear so you'll know which way it goes back in, it has no "up" or "down" that I noticed.
Remove the speedo cable retaining screw if you haven't already. Knock the shaft out with a 1/4 inch flat-end punch. This takes some serious pounding, so supporting the transmission cover is critical. I clamped it in a vice padded with 1/8 inch thick aluminum pads, with the lower end of the speedo drive housing resting on the upper face of the vice so it wouldn't move while pounding.
With the shaft out you can now attack the seal. I tried to pull it out with a 9/16 bolt screwed into the end of the seal, but that was useless, just not enough bite. A 5/8 inch tap might work(?). I have a small milling machine, and used a 5/8 inch end mill to basically grind up the metal part of the seal. A 5/8 inch mill is just a few thousandths of an inch less than the 16 mm diameter of the hole the seal fits in. Set it up so the mill turns free inside the hole without scoring the sides of the hole, and use the lowest turning speed you can. Feed the mill down manually, chewing up the seal until you feel more resistance, then stop. The increased resistance means you've reached the ledge that the seal seats against. The metal part of the seal is now gone, the remaining rubber bits can be gotten out with a 1/2 inch drill bit held in the hand.
This method avoids damage to the inside bore of the hole. This can probably also be done with a good 1/2 inch or larger drill press and a 5/8 inch end mill with a 1/2 inch shank. Careful alignment of the hole and the mill are the key, plus a decent vice that can be clamped to the mill/drill press table. Either way, use a low turning speed or you'll never feel the ledge. I recommend extreme caution if you try this with a 5/8 drill bit, the taper on the end of the drill will damage the ledge and you may go too far; however, if one is very careful, it might be possible to use a drill to get most of the metal part of the seal out. Again, a good drill press and decent vice clamped to the table are musts.
If you have to resort to other methods, I can practically guarantee scoring of the wall of the hole. In that case, you'll have to do some repairs (as Dan mentioned, maybe using JB Weld), so the seal seats properly and seals on the outside. It might be worth spending some money to have a machine shop do this, unless there is some tool that can extract that seal(?).
Next, clean things up and then drive the new seal in until it stops against the ledge. I used a deep socket that just fit in the hole.
With the new seal in place, lube the seal lip with ATF, then reinstall the gear, then drop the shaft back into position and hammer it back to its original position. Don't hammer directly on the top of the shaft, this may distort it and cause it to bind. I used a piece of aluminum between the shaft and the hammer until it was flush, then used the 1/4 inch punch the rest of the way. I whacked it one time too many, and the final depth is 0.260 inches. Close enough, I hope.
I put a couple drops of light oil on top of the shaft and spun it a bit to get the oil down the shaft. I put a light layer of Permatex No. 2 on the side of the closing plug and tapped it back in. Seal job done.
This little job is part of a 4-speed transmission rebuild that I'm doing. I'll post a few pics on that one of these days. All I can say right now is that rebuilding the transmission is a heck of a lot easier than getting the heater core out!!!
George Davis
'69 280 SL Euro manual