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I am wondering if the 2g and 1g awd trannies are interchangeable?

The 1-5 gear ratios are identical and of course the transfer case has different splines. The secondary gear ratio and tooth count (what ever the secondary gear is???) are different.

If the second gen transfer case is installed on the second gen tranny, and together installed on a first gen car with the oem rear diff ratios, would the front wheels be spinning at a different rate then the back wheels?

I am curious because the other local guy in town that has had his talon for a few years (parked because of tuning issues and schooling) is selling his car, he offered me his tranny today. Its a shep tranny, stage 3 I think. I am going to ask more about the internals later tonight when I visit him, see if it has any other options in it and see what he really wants for it.

Yeah, you can use a 2g tranny in a 1g, but not vice versa.

Awesome, but what is it that does not allow a first gen setup into a second gen car? I take it that the input shaft on the trannies are the same too (where the clutch disk slides on)?

The mounting points on the tranny. A 2g has 3 of its mounts bolted to the transmission, where-as a 1g has only the tranny mount bolted to the transmission. One of the many things that make 2g's extremely gay. You can put the 1g tranny mount on a 2g tranny and bolt it up to a 1g, but not the other way around.

Thanks for the info once again Captain. Got ahold of him, its the stage 3 with a 4 spider center diff, apparently his drivetrain is from a 1990 tsi, so the second gen part is not an issue . I am going to use the dsm shifter cables and shifter assembly so I wont need to modify anything else.

I am fairly certain that the 2g shift levers are the same as the csm ones. Just swap over the bracket that holds the cables to the tranny and you should be good. The csm shifter and cables will work fine.