Not good unfortunately. They looked to be wallowed out like Hydromike said. I know there is a thread on here somewhere about repairing the case holes but can't find it. Just wanted to let you know that it will need to be addressed before putting it back into the machine. Congrats for tackling it yourself now you'll have a greater understand of the machine. I highly recommend cleaning up the t-20 case and adjusting it while it's out of the machine, also a fluid replacement too ATF AND LIMITED SLIP FRICTION MODIFIER ONLY NO GEAR OIL!!! I'd also clean the interior of the machine while the engine and t-20 are out. Sounds like this machine wasn't taken care of so you probably will find some other stuff in there. Check the bearings, if good grease them, if bad replace them.
"Don't worry my Dad's a TV repairman, he has an excellent set of tools..I can fix It"