Slipping trannies are no bueno. With all that dried fluid underneath, it sounds like it's been leaking for a bit. Hopefully all the fluid didn't come out, but your stating that the truck is now grinding...not a good sign. That the previous owner "stopped driving it immediately" when the slipping started is kinda sus @ this point. Kind of hard to believe they didn't know about it.
Last year I picked up a Trooper that had a slipping tranny. I didn't care b/c it was for the engine. The previous owner told me that I had to drive it like a stick, i.e., start in low and then shift into higher drive gears to force it. I drove it like that 200 miles back home, and then it died right out front. Didn't move for 3 months, and then it had enough juice to move into the garage.
The options for the tranny vary. These are known for being kinda janky. Some people think that flushing will remove all the junk which will cause more leaking, etc. Others swear by it. I kept trying to fix my fluid leak and semi-slipping tranny and finally got fed up and swapped in a 5MT. I haven't worried since.
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