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Yes the oil feeds the entire assembly, motor and transmission. What do you mean by missing a tooth occasionally? Like doorfx said its probably the bevel gears. They seem to be a issue on those. Make sure you use oil that says JASO-MA on the bottle. Basically it must be wet clutch safe oil and regular car engine oil will cause you major problems. Problems like burning up the wet clutch. I run Shell Rotella T 15/40 diesel engine oil.
You said you have a service manual on the way? They are free on the link doorfx provided. I own a 02 500 and my engine is different then the one in the pic above. I don't have the lower case/oil pan but I'm not sure how your is designed. Either way you have to pull the engine out. They are easy to work on but just make sure you keep things in order and install everything in the order they can out. The use of clear sandwich bags and a black magic marker come in handy to keep things from getting lost. GL.
 

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I just looked up a 2006 500 TBX and the cases are the same design as mine and not like the pic doorfx provided. So you should pull the engine out and start spitting the cases. Just follow the service manual to the T. If your digging into it this far you might want to replace the piston rings and all of the oil seals and gaskets.
 
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