One to rack your brain on

It may seem simplistic, but it sounds as if the RF Gain pot has gotten dirty, or something has broken loose. Has this radio been in mobile service, and has it been modded at all? Ordinarily I would have suggested "try a different mic" but you said the S-meter stops indicating simultaneously with the loss of audio. Have you got any control cleaner you can spray into the RF Gain pot and work it back & forth several times?
-- Handlebar --

 

Second knob from the left; it's the "ring half" that goes around the narrow inner Mic Gain knob. If you've got cleaner, just get some of the spray into both sections of the pot and work the mic gain and RF Gain pots back and forth a bunch. Otherwise, I can't think of anything that would fail by heat and would then be restored to normalcy by using a technique I call "concussive maintenance"
-- Handlebar --

 

DS, something like this is invaluable if you're going to be messing around inside radios much-works great on old stereos, electric guitars, amps, etc, too.

 

Yeah every tech keeps it (or another brand) on the shelf. I remember when it was required for TV tuners.

Nothing works like the old stuff, though. Before EPA got their fingers into everything, tuner cleaners were Freon based, mixed with a slight amount of lubricant. The stuff boiled at room temperature. The "Scrubbing Bubbles" phenomena did a very effective job on any kind of electrical contact. The stuff made by CRC comes to mind.

Some controls exhibit more problems than others. The more current they carry, the shorter the time between failures. That's why volume controls "get dirty" even in clean environments without being turned a lot.

Ted