Today CarMax tells me they've found rust inside my tranny and that this is a possible reason that the transmission failed (2003 MC). I had no transmission problems until they replaced a shifting bracket, then, instant lock up of the tranny.

Can water get inside these tranny's and if so how, and could it be enough to damage it to the point of gears grinding and shifting problems?

My guess is there trying to find any reason not to cover this under warranty.

 

Moisture can get in thru condensation, just like brake fluid and moisutre on the oil fill cap on engines. Heat up and cool downs entices condensation on the inside. How often have you changed the transmission fluid? RedLine MTL is a cross, takes about a qt and 1/2.

 

It was changed when I bought it 18 months ago and then a few weeks ago.