Outer Limits 4x4 Board

So I've found a hole in the bell housing on my '93 Ferozas gearbox.

Pics: http://imgur.com/7Met8aY,X3lFIO4" onclick="window.open(this.href);return false;

It's small, but big enough to be trouble. Goes right through and dropped all the oil real fast.

I've never really dealt with something like this before, so here come some REALLY stupid questions.

Can the hole be welded then ground to profile?

If it can't be welded, can it be filled with Knead-it and then ground to profile?
If I try Knead-it I'll likely drill + tap a small bolt into the case located at the centre of the hole, put a bolt in that sticks out then wrap/pack the knead-it around the bolt. Once it cures the head of the bolt will be cut off and the remailing thread + knead-it will be ground to profile.

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Power steering. It whines, a lot. When turning the wheel it squeeks and groans quite loudly. It's a recent development. The fluid is down but still halfway between full and low, am going to top it up today.

Is this a sign that the power steering motor is shot? Is there a way I can check this?

Thanks in advance for you time. I hope someone is still active here

There shouldn't be oil in the bellhousing, I'd say you have a leaking rear main seal which will require removing the gearbox and flywheel to replace.