Very late post but the same thing happened to me. And I Googled it when I came across this helpful post.
Except in my case, I recently had the clutch plate replaced, as well as the water filter which was apparently leaking. All this cost me R12500 (about £680). It's a 2010 Yaris T3 Spirit with 210 000 km on the clock, and I had it for about 5 years now. I fetched the car from the Toyota dealership last week and about 2 days ago, it started making a metallic grinding noice just as you described. I'm taking it back tomorrow to have it checked. I'll ask them to have a look at the air filter pipe. Thanks.
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