Problems with front differential 2012 Impreza 2.0

I have a 2012 Subaru Impreza 2.0i Sport Limited (automatic CVT) that I am having some problems with the front differential.  

A little background… I was driving fairly aggressive for 1-2 hours and the “AT Temp” light came on.   I the slowed the vehicle exited at the next exit (~8 km) and turned it off to cool.  The next day I was driving about 70 mph (~110 km/h) when the vehicle had a sudden jerk and vibrated aggressively.  The rpms dropped to ~2000 and would not go higher.  I pulled over and smelt something burning.

The vehicle now makes a grinding clunking sound under the car when putting the foot on the accelerator.  It sounds almost like loose grinding wheel bearings and is coming from the diff/transmission area.   At first I thought it was the CVT... But I drained the CVT fluid and there were no signs of metal debris and color looked good.  I then drained the front differential and there was fine metal debris on the magnet.  I put new fluid in and drove the vehicle 25 miles (~40 km).  The sound diminished some, but is still there.  I drained the fluid again and it was littered with superfine metal flakes smaller then glitter.  I found one piece of metal as thin as a razor blade and about 8mm x 3mm attached to the magnet.

I planned on selling the vehicle this month prior to the mishap... so I’m trying to determine my options.  My brother is a mechanic and we can do the work.  The problem is we can’t find a front differential.  It seems that everyone wants to sell the differential with the transmission.  My question(s) to the forum are:

Does this sound like the front differential needs to be completely replaced?  Or is it perhaps an easier repair?
If replacement its needed… does the transmission also need to be replaced or can a guy just do the diff?
Can any more harm be done if I keep driving the vehicle and ignoring the sound it makes?  What are the consequences?  

Much appreciated!!

Edited December 6, 20169 yr by thorn197