What route might the chip make it out from under gear to the outside? The thrust plate is clean. There is zero clearance at the retaining nut on the front. Isn't there a tight clearance between back of gear and thrust plate? Will there be obvious damage inside the seating surface of the gear?

The car did run for a thousand miles before the tooth failure. However, a distinctive turbine-like sound was noted from the first time the car was started with the IPD gears. I'm not getting the turbine noise from the second set of steel gears.

Your logic for blaming the woodruff key at least has merit. I am still not sure that there is no doubt about it. How do we know that the key damage is recent?

Joe M in WV