Just posting this because it might help someone else who encounters the same problem on their minilathe. I had grinding and gnashing noises coming from the drivetrain of my lathe lately and just assumed that the spindle gear had broken a tooth off. Went in today to replace the spindle gear but it turned out to be just fine. Finally tracked the grinding noise to the motor by running the motor without the drive belt attached. I figured the bearing must be shot in the motor so started disassembling the motor to replace the bearing.
Turns out the bearing was fine, but the plastic fan blade inside the motor under the motor front cover had cracked and was making the racket.
First picture shows the motor disassembled with the front cover on the left, the motor body on the right, and the cracked fan blade sitting on the lathe. The second picture is a close up of the cracked fan blades.
Not sure what to do yet, don't really want to buy another motor, but I think it's unlikely that I can buy just a replacement fan blade. Thinking about gluing the fan blade back together, but the idea of something spinning at high RPMs held together by crazy glue doesn't seem reliable to me. I think I'm going to try stealing the fan blade from a computer fan and modifying it to fit.