As you have probably found, the XRS has had major clutch issues, and on every forum about the trix xrs, it usually has several threads just about the clutch being such a worthless pile on these cars.
About the warranty, if i were you, i would go to the dealership and very explicitly tell them that they recommended the Ext. warranty, and you got it through them, not the other company, and if they want your business ever again, then they will fix the clutch according to the warranty they sold you, as well as the squealing belt. that being said, and assuming they do replace the clutch for you, it will be another one of the same crappy clutch that will go out on you in another 40-50k miles.
in terms of getting a new clutch and having it installed, you will probably get many more recommendations as to what clutch and flywheel to get. my recommendation is to go sign up on
www.matrixowners.com and look in the local club that you would be in. they can help you out more with getting it installed at reasonable prices. there are several good clutches out there for the matrix. many people who replace the clutch usually go with a Fidanza flywheel, but i dont recall off the top of my head as to which clutch they go with.
Good luck to you and i hope i have at least pointed you in a direction that will be more helpful
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2003 Matrix XRS-6MT-Black Sand Pearl-Castrol Syntec 0W30 European Formula

Mods - 18" Incubus Paranormal wrapped in Toyo Proxes4 - T-Max Style front body kit - Escort Passport 9500i...what a friend to have in the car

- Part Time Mod Thule Roof Rack