Driveline Problem?

Bought a 2000 Forester cheap because it has a serious problem in the drivetrain that the previous owner thought was the steering rack, but isn't. It's got an AT & 160,000 miles. Engine runs good, but it feels and sounds like the front end just wants to seize or rip itself out of the car. I haven't even tried to drive it other than onto and off of a trailer. You might assume it's a cv joint, but it sounds like it's coming from the transaxle. It thunks and clanks and makes an awful racket, shakes the whole car when the wheels are on the ground. With all four wheels off the ground and the tires on, all four wheels turn and the racket is loud as hell. With the front wheels removed and the transmission in gear, none of the axles engage even with the gas pedal down and there is no sound from the tranny at all until I put it in reverse. Then, the loud clanking returns and the wheels turn. I'm getting ready to just pull the front axles just to see if it still makes the noise, then prepare to pull the tranny, unless anyone has other suggestions. Also, if I have to pull the tranny, should I just pull the engine with it and do the timing belt and water pump? Or, is it that much more of a pain in the *** to pull the motor too?