I was driving 65 MPH on the highway and my drive shaft broke.  I attached a pic of where the drive shaft broke off at.  Can anyone tell me by looking at this if it broke off at the transmission or if it broke off at the transfer case or some other part.  

That is the transmission.  There is a rear section of the transmission case so you could replace just that without having to get an entirely new transmission.

this is another pic of the damage.  

Thank you so much for answering - I have been trying to figure this out for days. 

You can see the rear section of the trans better in this picture.

 

http://www.surrealmirage.com/subaru/images/swap/14/DCP_3338.JPG

 

 

I merged your other post into this one to keep things organized.

I can't tell you how much I appreciate your help! 

 

The pic you sent was very helpful too..have never seen what the whole trans looks like before.  . 

very easy repair.  8 or 10 14mm bolts and that tail shaft housing comes off.   Its actually easier to do than a timing belt, or a tuneup

So the U-joint failed and it tore apart the tail section of the trans?

 

What are the chances there is not further damage?

Most impressive!

 

Check the output splines for damage from that flailing u-joint cross.  It also looks like a mounting bracket (for the exhaust?) below the crossmember took a beating.

Yup, replace the whole transfer section. The case exploded because the tailshaft was being whipped around like a baseball bat in there. Bearings are ruined, center diff may have been damaged but probably not. The transfer gears probably have some funny marks in them though. Best to just replace the transfer section and driveshaft. And the gear shift linkage that got ripped off of the transmission as well. Heat shield could maybe use some tender loving hammering back into place but should be fine otherwise.