ok here is what is going on:

1. Car Leaks Water from Timing Belt Area. Im thinking water pump seal.
2. Car will not go into first gear or reverse.
3. When I drained the Tranny Oil today, it came out Milky but not milky in the engine.

My current questions for you:

Are these related?
What do you think is the recommended fix?

Lets here some thoughts here...

My solution was to pull out the tranny and swap it with a new one. But, since the oil in the tranny is milky is my water leak causing the tranny to function incorrectly?

Please help!!!!!!

 

I highly doubt they are related. There are no passages from your coolant system to your transmission. And even if it could possibly be related, it would be in your engine first before the transmission. I think they are 2 separate problems that both need to be addressed.

Replace tranny and replace water pump.

 

^Yes^, replace your timing belt AND tensioner while you're in there!

As far as the tranny goes, does it go into any other gear? Will it go into 1st or R with the engine off? Manual trans right?(just want to make sure)

If you are getting coolant in the trans you have MUCH bigger problems.