loud clunk and then motor dies

I had been noticing that when putting in reverse the gears would grind until giving it a little throttle and then operate fine. Then I was backing off trailer and heard a loud clunk. Since then it will idle with loud clunking and then one big clunk and she dies. With motor off and in neutral you can spin freely then it will catch like it is gear. put in in gear and it will act normal then spin freely like it is in neutral. Any suggestions as to where to start. I have a 1991 40hp johnson outboard. Thanks for any help!