Farmall H PTO Behavior

The SN is from 1940, but it has a 1-3/8 PTO shaft. When disengaged, the shaft seems to turn freely about 130 degrees (sort of like freewheeling) then seems to engage teeth while continuing to rotate. I assume something is stripped. What would be most likely place for teeth to be stripped if this would be a symptom. Or perhaps this is just some bearing drag of some sort since its disengaged?? I'm not there but will investigate next trip. It does not yet run. Or could it be the engagement mechanism dragging part of the rotation cycle.
 
Before starting it, slowly remove the drain plugs for the rearend and the transmission and drain the water/condensation out. This may also help with the pto as the gears can rust and cause the roughness of the gears. The engagement is a small rod on the side of the pto, up engaged, down disengaged.
 
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