I went under my Goddaughter's '70 Duster (360/727) to do an oil change and saw this.

Looks like a sleeve/bushing/collar worked it's way out the back and took the seal with it.

Why would this happen? Can I just shove it back in and replace the seal? The trans has roughly 6000 miles on it.

That driveshaft is too short, causing this problem. I would pull that bushing , install new if it fits tight and get a longer driveshaft.

Thanks for the reply. That pic might be deceptive cuz the front of the car is way up in the air. The shaft has roughly 3/4" of travel.

If the aluminum housing bore is all spun out from bushing spinning, it kinda looks like it, you will need a new tailshaft housing.

Travel sounds spot on, but it should only be 1" out from seal with car sitting on its rear suspension, that looks like at least 3".

I had better be more clear here, with car sitting on its suspension you bottom the yoke in the transmission, pull out 1", measure center to center of u-joints for driveshaft length. Some after market seals have an additional dust seal that is about an 1" longer so 1" from seal would be incorrect on those.

Looks like too short of shaft from here too. If the housing will still hold tight to a new bushing, you can rent one of them driver/installer tools that will remove or install bushing with housing still on trans. We used them at trans shop, and cannot recall who mfgd it.(tool)

Thanks for all the info. I'll be checking it out later today.

I agree with the others.
3/4 inch movement is fine, but that yolk is sticking way out the back of the tail shaft. Gotta wonder how much spline engagement there is.
Good thing you found this before it blew apart on the road.

I think you will find the bushing is siezed on the yoke. Why does the yoke look black and rough when I blow up your pic? You didn't paint or undercoat it did you?

Who rebuilt the transmission ?? With that low mileage, whoever did the tranny should still warranty it . . . you would think . . . .

Is that rust pits on the seal surface of the yoke?