transmission fluid leak.

So my Series 3 109 had developed what appears to be a leaky transmission.
It will start and run fine, but eventually heats up, and as it gets hotter, clatter of syncromesh increases ( either that or it is the valves ???), after which I seem to lose power to the accelerator, and it finally cuts out.
Let it cool down ( easy in this weather) and she'll start right up and we're back to square one.
All of this is ended with lots of smoke coming from the underneath bottom right (if you're looking into the engine bay ).
I've taken it to my mechanic who just goes "mate, engine's cooked."
I don't really believe him, as I would think if the head had gone she wouldn't start ??????
3.3 Perkins diesel - anyone got anything to add ???
As this weather closes in my daily car is getting less and less viable - I need my landy on the road.
Any help appreciated
........just to add: the mechanic hasn't ACTUALLY looked at it yet - he just bases it on the amount of smoke coming from the exhaust - which, on a cold day from a diesel .........?

You need to find out whether its the 'engine or box.
You say the engine eventually stops, if you dip the clutch will it re start, does the clutch work ok anyway.
Does the engine temp read ok or hotter or colder than normal.
Does the top hose feel rock solid?
Does the oil on the dipstick look like mayonaise?
Have you checked the gearbox oil level?
If the issue is the 'box then its fairly safe to say its fecked, but you can allways get another on the bay, bit of a bitch to fit though.

Many thanks for the reply.
Once cold, she start, runs and gears and clutch work fine including overdrive. She does heat up ( above N, but never into the red) after a mile or so in top gear, but will still shift down without any effort, till the noise and the eventual stalling.
Oil still clear as far as I can remember, but will check again. have not checked the hose.
There is clearly a leak from below though. Could it be gearbox oil ? Would this cause any of the symptoms I mentioned ?
Many Thanks
Garp

Still cant really say, where is the patch of oil, under the engine or box, and then which end of the engine or box is the leak from.

Will check tomorrow and get back to the forum - too bloody cold out now !
Thanks

Did you freeze to death out there? what was it? I'm keen to find out, now I'm stuck indoors with a broken foot!! (now hot outside!!!)