transmission or shift linkage

I have a 1989 vw vanagon that started having trouble shifting into third and forth gear, actually it will not even go into either gear what so ever. I have spent hours online reading forums and tech help pages looking for a definitive answer about whether its the shift rod linkage or internal transmission damage. I have removed the entire shift rod linkage from the gear shift back to the transmission. The transmission has a little arm poking out of it that the shifting rod mounts into. When I grab this arm directly with my hands I can go threw the different gears manually but im only able to find reverse and assumably 1st and 2nd but no 3rd and 4th. My question is since Im shifting gears manually without any possible linkage adjustment being out of wack to create this symptom does that mean indefinately that the gear hub or other internal parts hasve failed inside the tranny?
Thank You,
Brandon Mueller