Tim Z Z Z Z and Jeff B - upon listening to the U-tube video again I'm certain that noise is the PTO itself - I just know I've heard it several times. Jeff mentioned the head of the bolt holding the S/G adjustment arm since the PTO basket pulley could slip back against it. I've heard that sound before and I don't believe that's what I'm hearing. I think one of the springs in the PTO itself, has let go, lost it's spring action, or possibly one of the screws has gone loose, both of which would allow the clutch plates to slip and turn freely and/or rub the disc. Tim, although I don't think you'll harm anything further running it the way it is, as Kraig already noted, you could also spin the PTO pulley by hand WITH THE ENGINE OFF and see how loose it is, or if it wobbles on the bearing. Because of the bearing it rides on and the 6 set screws used in the assembly, I don't think it could come off on it's own, but it may wobble all over and break the tabs off your clutch disc. Let us know what you find. Please make sure the engine is OFF when you are checking this PTO pulley.
Hydro Harry
Old Cubs Never Die (but they do get to spinning and a scraping)