if the cycle shifts good in 1st and 2 nd gear , then the grind noise hits , in other gears , it does sound like the clutch bands are eating each other , { I bet it kind of sounds like --- garrrrrggggccccc --- or the hard shift noise when going into the gears at take off .... o-kay I did adlib a bit for the noise

} wonder if you could : with the cycle off not running , slip the cycle into 3 rd or 4 th even 5th gear and get a little push too see if you could hear where the sounds might be more defind - left side right side , more near the clutch box area , or front of engine ? I haven`t been on the s-e 5`s so I do not know if this is possible ... { another thought , is the oil a light brown not the dark coffee color ? if so it might be a head gasket blown , and like one of our folks on top mentioned , it might have cooked a cylinder ... } BUT do not flip out yet , find the cause , and then take a long look at , { possible trade in .... some time a dealer might do this } just thinking with you .... let us know if you have any other clues yet ! ----- good luck our friend