Hello and Thank you for choosing Just Answer. My name is XXXXX XXXXX X will be helping you with your question today. Yes this does mean there is a fault with the transaxle system and if it is smoking I highly recommend not to drive the vehicle. What would need to be done though is a code reader needs to be plugged into the car and retrieve the trouble codes to tell you why exactly the transaxle light is on.
What is a transaxle system?
The Automatic Transmission
So this is a big deal then - just asking because this is my daughters car at college and I'm trying to help her long distance.