It sounds like the dowel pin sheared. At the back oh the engine, there's a slotted drive hub where the driveshaft slides in. A solid dowel pin fits into this slot and is what sends the power to the hydro. As the cubs get older, these slots in the drive hubs widen, allowing the engine to act like a hammer on the dowel pin. They are cheap and still available, so just replace the pin. Make sure to use the right part, if you cheat and use a bolt or a roll pin not only will it break again soon, but it will wallow out the hole in the driveshaft the pin goes into. Support the driveshaft, use a punch and hammer to drive what's left of the old pin out, and then put the new pin in. Good luck!
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Ian
Mine: 72 w/ k301, 3 125's, 1 w/ hydro lift, 38,42, & 2 48 decks, 2 42 front blades, QA-36a & QA-42a thrower, tiller, lo-boy 154. Also, LOTS of parts.
family's:2 105's, 2 106's, 149, 2 lo-boy 154s, Farmall Cub.
Non-IH: 1940 JD Model A, 1954 JD 40 U, 1955 JD 40 Crawler, 2 1956 JD 420 U's, both w/ Henry Loader and Backhoe. JD 110. Wheel Horse (model unknown.) Power King 1614. We love our tractors! 
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