If you've got slipping, it's a problem with the clutch plate, or the clutch pressure plate.

The noise could be related to the clutch plate, or pressure plate, or it could also be the throw-out bearing.

Either way, you've got a problem in that area, and to fix any problems in that area, you've got to split the engine and transmission. Spliting the engine and transmission are the biggest part of the job, so once you are in there, you might as well replace all the clutch componements: the clutch plate, pressure plate and throw-out bearing. While you are there, also examine the rear main seal. I am not familiar with the 850 in particular, but while you are in the area, check the pilot bearing/bushing and the first motion shaft seal (if applicable).

Basically, you mechanic is correct.