TKO 600 Grinding.

[Excaliber]

From the Google, this might say it better than my lame attempt:

RELEASE PROBLEMS

If the clutch does not release completely when the clutch pedal is fully depressed, the disc will continue to turn the input shaft. This may prevent the driver from shifting the transmission from neutral into gear, cause grinding when the gears are changed, or cause the engine to stall when coming to a stop.
A clutch that won't release may have a misadjusted linkage, a broken or stretched release cable, a leaky or defective slave or master clutch cylinder, air in the hydraulic line or cylinders, corroded, damaged or improperly lubricated input shaft splines, a worn pilot bearing/bushing, a worn bearing retainer, bent or worn release fork or pivot ball, bent clutch drive straps, bent or distorted clutch disc, a clutch disc that was installed backwards, or mismatched clutch components (if the clutch was just replaced).
Other things that can cause the clutch to drag or not release include heavy gear oil in the transmission that's too thick for cold weather, defective or worn clutch pedal bushings or brackets, or flexing in the firewall or any release component attachment point.

[jhv48]

Clutch mechanism has been checked out from one end to the other. It doesn't drag, nothing is warped or damaged. The clutch is completely disengaged when the trans is grinding away. Verified by puting the car on the rack, (engine running) with one guy in the driver's seat and one under the car watching the clutch disengage. With the pedal fully depressed, the rear wheels do not turn, and can be turned by hand in the opposite direction.