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Well, the grinding noise is quite possibly the bearing in the AC compressor. $200 seems cheap for the compressor itself. I'd expect around $800 from a dealer to replace that part. The next part is the trick:

To replace the AC compressor, they will need to empty the system. As a general rule (that not everyone agrees with) whenever the system is opened, the dryer should be replaced.

Now, another option is to go to an independent shop that might specialize in AC systems. Some AC compressors have clutches that can be replaced, and I've heard of compressors that have bearings that can be replaced. If the Isuzu one is like that, you might be able to get away with a few hundred to replace the clutch/bearing.

Otherwise you'll have to replace the whole compressor, which may or may not require a new dryer.

-Tad
 
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