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These late 90's hydros are all over the place as being a problem. I also has the same kind of deal with a 99 Scotts 18hp 46"(Murray), worked great, bought it for a decent price, then at home it went a couple of hundred yards and then nothing. I figured that if it was working, it should work fine. Changed the oil and gear oil and noticed all kinds of aluminum in the old oil, looked like glitter. Crossed my fingers and put it all back together. (Peerless VST 205-024) Buying a new rear end is out of the question as the unit itseld is over $500. SO, I'm in the process of dismantling again andcracking it open to clean out the guts and see if I can find the wear. I'll take pictures too.
Hopefully some little oil port is clogged and I can get it working again. If not, I'll try to modify this mower with a standard transmission.
 
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