How high were you winding it on the dyno? Here's why I asked:

Abut 10 years ago I was running a Turbo 350 in my asphault stock car. One night, just as I was nearing the end if the backstretch and the engine was reaching its peak of about 7200 RPM, there was a "BOOM" that sounded like a Civil War cannon went off under the car and the drive shaft came out from underneath in 3 pieces. I coasted to a stop with the rear end making a "crunch-crunch" sound. Teardown later revealed the rear gears were ruined and the bellhousing broken all the way around off the trans. We thought the rear end had momentarily siezed and caused the engine to twist the trans off.

We replaced the ring & pinion and trans and a few weeks later, the same thing happened again. This time we consulted a local professional racecar builder and he assured us that the trans and rear end problems were unrelated, so we replaced the entire rear end center chunk (9" Ford) and put in another trans. Sure enough, a few weeks later we twisted another Turbo 350 off of the bellhousing, but this time there was no damage to the rear end or drive shaft, just another junked trans and an oil fire.

A few days later, while bolting in yet another Turbo 350, one of my students came to me with some interesting info. It seems his grandfather was a retired automatic transmission technician. The grandfather had instructed him to tell me that the problem is a common quirk of Turbo 350's. According to him, depending on the tolerances machined into the trans on any given day at the factory, somewhere between 6700 and 7200 RPM the front pump in a stock Turbo 350 will override the valve body and engage ALL the clutch packs simultaneously! That's like putting a standard trans in 1st, 2nd, 3rd, and reverse all at once and popping the clutch at 7000 RPM. Something's gotta give and it's usually the bellhousing or trans case.

I don't know if this is your problem, but it's food for thought. We were running a 6.33 rear gear and running the trans in high. The car was 3010 pounds with me in it. Every time the trans blew, it was at the far end of the straight where the engine reaches its peak RPM. Could it be that the dyno puts more load on the trans than would be encountered in a car...?? I have run Turbo 350's in all my hotrods with no problem, but I'm not twisting them 7000+ RPM repeatedly.