I'm thinking that the bellhousing got cracked because the trans didnt sit flush against the back of the block and he tried to make it flush by tightening the bolts to bring the two together.
In any event, this is really not a good situation from any angle. The only thing I can possibly see happening is roshan getting his wheels and tires back. Bill is never gonna get a muffler out of this and craig is out 250 bucks.