Yeah, something came loose in there, wedged itself, and broke the case
.
Obviously, don't start the engine (or even turn it over with the starter) since we're not sure what might still be in there hitting things. Next step is to drop the engine and separate the trans, and see what's damaged.
Welding magnesium can be done, but I'd be a little concerned about it holding up since that area of the trans is structurally important. Magnesium weldments are not known to be the strongest.