callaway wrote:
took winch apart as per what superwinch guy told me, and found water/rusty grime inside...

The main o-ring looked good, so not sure where that amount of water came in from, but it's been there a while for it to be that rusty... winch was never submerged or anything like that =/
So... is the winch garbage now ?
You may get away with just putting another motor on it,though they are not cheap(could almost buy another winch for there prices).
I had the same issue with my WARN after 4 years of owning it.It turned out that how it's mounted in a ARB bumper(not your issue) was the motor drain was in the wrong spot and the motor needed to be clocked 90 degrees.Well they found out about this after I bought my winch so I did not have the added warning sheet for this issue.They did however warranty my whole winch for a brand new one and was kind enough to clock the motor for me,which is super easy to do on a WARN.