yep, that's the extension housing/adapter that mounts the transfer case to the allison. They have been known to crack from time to time. The first time mine did, I think it was because of a bad ujoint. Second time, not so sure.
If you ran the fluid out until it wouldn't move or not move very well, yep, you've likely fried it. HOWEVER, explain what you mean when you say "need a new transmission"??? It should just need a rebuild and for the kind of money they are talking, you can get a FULL built trans. shipped to you and installed for same money or a little lower level trans. built for a bit less.
Where are you located???