Honda Accord Forum - Honda Accord Enthusiast Forums - Timing belt or transmition in '94 accord?

I bought a Honda accord '94 with an automatic transmition about 4 months ago. It had been sitting a while, but mechanically it looked sound and only had 140,000 miles on it. I got it for $1,700 after talking them down a lot.
Recently the car started smoking badly from the exhaust when I would start it up, then also just a bit under the hood. I figured it was time to get the oil changed so I took it in. They told me it was really dirty so I paid the extra $20 to get it extra cleaned out and all in working order. They also told me my transmition fluid was burned and sludgy and were going to charge me $120 to do a flush and fill. I said I would do it myself. Drove it home fine, didn't smoke at all.
Then today I went to drive to work and my car would not go over 10mph, the gas pedal seemed hard to push down, and it was revving at around 2rpm. I turned around and shut it off when it proceeded to make a repetitive clanking noise from under the backside of the car.
I had a friend of mine come and take a look at it tonight, he checked the tranny fluid and said he can't even tell there's any in there whatsoever. I bought 3 quarts of the Honda ATF dw1 and we're going to pour that in tomorrow unless it could be the timing belt or something else?
I don't know a whole lot about cars as you can probably tell from this post, but any advice would be really appreciated. I'm not putting more into the car than I payed for it so I'll just be parting it out if I need a new transmition...which is a shame because it's my first car and I'd like to see it last.
Thanks!
-Chloe