What could it be?

[spaceshuttle]

My car is an 89 325i with a 95 s50 and the original g260 trans.I went to drive it and it wouldn't go into any gear, it also made this horrible screeching sound when I pushed the clutch in. It would go into gear if the car was off though. The fluid looked good and was up to level. So I dropped the tranny to see if I could find the problem when I dropped it everything still looked fine.

What should I be looking for?

[jlevie]

The noise was probably a bad throw out bearing. The inability to select gears with the engine running could be a problem with the clutch hydraulics, or with the clutch itself. Since you have the transmission out, it may make since to just put a new clutch in it and then repair (if needed) the clutch hydraulics. You certainly should replace the throw out and pilot bearing.

[M-technik-3]

Or your transmission mounts are worn not allowing you to select a gear.

[spaceshuttle]

I'll check those things out that makes sense how it could be the bearing and the hydraulics thanks.