low budget bracket racing blues

I appreciate you all's input! The whining noise only happens while the car is rolling in gear. Its quiet when its stopped. I dropped the fluid a while ago and there is a small amount of black stuff covering the bottom of the pan. It doesn't seem to be an extremely large amount,but its there. The bands (never touched em before) were way off from their recommended adjustment. Tightened em up,and guess I'll try new fluid/filter this week?

Questions: should there be a drop spacer lowering the filter into this huge pan I got on it?
Would too loose bands cause the slightly burnt fluid and erratic et's?
how bad would it be to run it til the possibly bad planetary grenades?
trying to get all I can outta this thing!!!