1st to 2nd gear grind.....can I fix it?

I don't know how you feel about the DYI thing when it comes to gears, some people don't like the idea of working on transmissions. If the DYI transmission fix idea isn't something that you would rather leave to someone else, here are some resources:

See http://www.ttcautomotive.com/English/onlineorder/product.asp to download a FREE service manual for T5 or Tremec 3550/TKO
You will need the Adobe Acrobat viewer which is also a free download – http://www.adobe.com/products/acrobat/readstep2.html

See http://www.hanlonmotorsports.com/ or http://www.ddperformance.com for parts

A T5 rebuild kit with syncros, bearings and other small parts costs about $160. It does not include any gears or shafts.

http://www.hanlonmotorsports.com/ also has a video on how to rebuild your T5 or Tremec. It costs about $20, and is worth every penny of it.

I did a Tremec 3550 rebuild, and it wasn't that difficult. The video was an immense help, and I would recommend viewing it. At $20, it will give you an opportunity to look and decide for yourself if you think that it is something you want to try to do.

Transmission and clutch removal & replacement.
Edited 11-Jun-2007 to include locator dowel installation & VSS sensor clip.

Before you get started, buy a Chilton or Haynes shop manual. You will need it for the bolt torques and patterns.

1.) Jack up the car front and rear, use jackstands to be safe. You'll need about 24"-27" clearance to get the transmission in and out if you use a transmission jack. Tall jack stands are the order of the day.
2.) Put a 2x4 wood block under the engine oil pan to support the engine. Jack it up slightly. This prevents damage to the motor mounts when the transmission mount is removed. The oil pan is plenty strong for this purpose. Disconnect the negative battery cable. You will need a couple of extensions and a ½” swivel socket to remove the top starter mount bolt, which is accessed from the front and under the headers. Leave the starter wiring connected unless you plan to change the starter at this time.
3.) Label all the wiring for the transmission before disconnecting it. Disconnect the O2 sensor cables at their connectors. Disconnect the speedo cable by pulling it straight out of the VSS sensor, or by removing the bolt that holds the VSS sensor in place. Do not remove the clip that holds the VSS sensor in place. If you remove the VSS sensor, zip bag & tag it along with the bolt that secures in place.
4.) Remove the drive shaft, the rear bolts are 12 MM. You will need a high quality 12 point wrench for this: do not skimp or you risk rounding off the bolt heads. A helper to step on the brake to keep the drive shaft from turning will be helpful. Use your foot to apply pressure to the wrench to loosen the bolts. Note the yellow markings in the drive shaft and write down their alignment.
5.) Put a catch pan under the rear of the transmission to catch the fluid when you slide the yoke out of the transmission. I recommend that you drain the transmission at this time. There is a pair of pipe plug filler ports on the side of the transmission. Use the lower plug to drain the fluid.
6.) Inside the car, remove the shifter boot and then remove the shifter handle
7.) Remove the H pipe & rear trans cross member. The chassis to cross member bolts are metric, you need a 15 MM & 17 MM socket or wrench. Note the direction and size of the humps on the cross member and write it down. Inspect the rear transmission mount and replace if damaged.
8.) Remove the transmission. You will need a long extension & a universal joint with a ¾” socket. A transmission jack or a helper is almost a must have unless you can bench press 75-100 pounds with ease.
8.) Remove the clutch cable cover and pry the throwout bearing arm forward enough to slide the cable off.
9.) Remove the bell housing using the long extension & a universal joint socket. Note how the throwout bearing rides it the throwout bearing arm, and which end faces the clutch pressure plate. Write it down or make a drawing if necessary. Also note the arrangement of the wavy spring that holds the throwout bearing in place on the arm. Put it together incorrectly, and you have an annoying noise you can't find easily.
10.) Remove the bolts securing the pressure plate to flywheel. Be sure to label & zip bag them separately from the rest of the parts. Work in a star pattern to reduce stress on the pressure plate mounting tabs.
11.) Remove the flywheel mount bolts, as you will need to either replace or re-surface the flywheel. Be sure to label & zip bag them separately from the rest of the parts. Tap the locator dowels out of the flywheel with a 1/4" pin punch. Zip bag them together with the flywheel bolts.
12.) Inspect the transmission input shaft where the throwout bearing rides. Replace it if worn or damaged.
13.) Inspect the throwout bearing, throwout bearing arm and ball pivot stud for wear or damage.
14.) Inspect the rear oil seal for leakage and replace if required.
15.) Remove & replace the pilot bearing. A puller borrowed or rented is helpful here. A wood block will be used to drive it home.
16.) Install the flywheel, noting that the bolts are an odd pattern, and it only lines up one way so that all the bolts go in easily. Torque to specs according to the shop manual.
17.) Install the clutch disk with the hub springs facing the rear of the car. Use a pilot tool available for $3-$4 from the auto parts store to line it up.
18. Install the locator dowels in the flywheel. Then install the pressure plate, be sure to use the pilot tool prior to tightening the pressure plate bolts. Torque to specs according to the shop manual. Remove the pilot tool when you are finished torquing the bolts.
19.) Install the throwout bearing on the throwout bearing arm, noting the direction of the bearing and it mounting in the arm. Position the wavy spring to secure the throwout bearing in the arm. Refer to your notes to make sure you have it positioned correctly.
20.) Install the bell housing. Torque to specs according to the shop manual. Install the starter, the top bolt is reached from the front with the extensions & universal socket.
21. Install the transmission, have the transmission jack or helper at hand to lift it into place. Watch out that the stub of the shifter does not tear the shifter boot. Some 7/16 bolts with the heads cut off can be used to help support the transmission as you slide it home. It may be necessary to press the clutch pedal to get the transmission to slide the last ½” or so. Remove the guide studs if you used them & torque to specs according to the shop manual.
22.) Reinstall the clutch cable by prying on the throwout bearing arm. Replacement of the stock cable or quadrant is recommended if you haven’t already done so. With adjustable cables, both nuts go on the back side of the throwout bearing arm.
23.) Reinstall the rear crossmember & transmission mount. Torque to specs according to the shop manual.
24.) Reinstall the wiring and speedo cable or VSS sensor if you removed it. On cars with a VSS sensor, push straight in on the speedo cable and it will snap into place on the VSS sensor.
25.) Reinstall the drive shaft, slide the yoke in place. Align the rear yellow markings and install the bolts. A helper to step on the brake to keep the drive shaft from turning will be helpful. Use your foot to apply pressure to the wrench to tighten the bolts.
26.) Remove the jack from under the engine oil pan.
27.) Refill the transmission with the proper fluid. T5’s use Dextron ATF, Tremec 3550’s & TKO’s use GM Synchromesh. There is a pair of pipe plug filler ports on the side of the transmission. Use the top plug as the filler port.
28.) Adjust the clutch cable according the manufacturer’s instructions if you have an adjustable cable & quadrant. Set the emergency brake and use the drag it provides in order to determine where the clutch starts to engage. You should have 1 -1 ½” free play from the top. The cable will not have any slack and will have some preload on it when properly adjusted.
29.) Re-install the H pipe and remaining items.
30.) When you have visually checked all the bolts, fittings and other parts are present and not interfering with each other, then take the car down off the jack stands.
31.) Be prepared to put the car back up on the jack stands to adjust the clutch and tighten up any loose items found after the test drive..

There is another tech note on transmission R&R by Mustang5L5. Do a search and read his instructions too, and you will be all set to remove and re-install the transmission or clutch.

Its a cake walk. You can put your car up on jack stands and have it out in 40 minutes. Here is all you need to remove

-shifter bezel, shifter (from the inside of the car)

Go under the car and
-drain the oil
-take out the drive shaft
-drop the h pipe
-undo the harness to the tranny (3 simple connections)
-remove the 4 tranny bolts
-undo the crossmember
-slide it out

As far as disassembly, buy a munual. There are alot of roll pins and c-clips and they all need to come off in a specific order. When you take it all off, make sure you have a clean surface to lay them all out in the order they cam off and don't move them around. I took mine apart and ordered just what I needed. Most often, the entire rebuild kit is not needed or used.

I just bench pressed it out and slid out from under the car on creeper with the trans on my chest.

The video is a step by step procedure. I recommend that you buy the video first and view it several times before doing any on the work. That way if it looks too difficult, you won't have a basket case for someone else to fix.