Thanks guys...

The trans is cast iron by the way (not rebuilt but from a low mileage car). It has been sitting for a very ling time since the car has been a 4 year project. It is nearing completion (this year) and would like nothing leaking. It is not a streaming leak but rather a drip that becomes a small puddle after 4 months.

I did take it apart and replace all gaskets/seals and have a trans specialist look at all the gears. It works and shifts just fine (reverse and 1st gear in and out the garage).

Could it be possible that once everything heats up the "gap" between the housing and shaft might close enough to stop the leak??

It might not be worth trying to fix since it sounds like a I'd be risking damage to other components...

Steve