You still havent given enough info..

The thing about the starter bolt is KEY!

Is the starter itself moving when it looks like it's 'jumping out'? Is the starter mounting surface flat, you said it moves when bolt is tightened?
When you say looks like it's jumping out.. did you mean back toward the starter?
COULD be the ring gear was ruined when bolt previously got loose and the ring teeth are worn and chipped. Did you look close to see if they are uniformly worn?
Or not. It's the FIRST THING you should look at when you pull a tranny, whatever the reason.

 

No the starter was slipping off the flywheel teeth, the flywheel would turn, but then it would stop (the starter will keep spinning though, but grinding on the teeth of the flywheel). i took a closer look at the crack in the hole, and it seems that the crack doesnt go all the way to the thread. i,m not to sure this could be the problem. here are some pictures of the flywheel, starter and starter bolt holes.

VIDEO of holes : http://img850.imageshack.us/img850/7870/aec.mp4

Pics: ImageShack Album - 8 images

The reason why i also think its not that is because it was doing all the grinding noises before it cracked!. Does anyone know if the angle of the teeth in the starter are fine like they are shown in the pic, or are they different? Another thing i noticed... When i would put the bolt the starter and try to crank the engine, it would seem to do it fine for 2 times straight, but after that it starts to do all the grinding again.. and i check the bolts and they are a little loose. (both bolts). could it be someething inside the engine that makes the flywheel to hard to spin that the starter cant move it? as i mentioned before, it turns at some points and then it starts grinding, as if the starter teeth moved away from the flywheel or if the flywheel is getting stuck .. once the engine starts it runs perfectly fine..

ill try adding some permatex red threadlocker to the starter bolts and adding half shim (outer bolt) see if it would get closer to the flywheel and the bolts will stop loosing.