Finally back to work and I have a little free time so I put together a quick diagram of the situation. The area in red is where I've got the floor cut and broken away.
Oddly enough, I've seen what you say about the Fernco fittings before that I can find them at Lowes but not Home Depot. But this time I actually did find the fitting at Home Depot.
As I approached the cleanout, my back quit so I didn't finish cutting breaking and removing the floor. But what I did remove was enough to see that the clay pipe did not route in a straight line towards the cleanout, and what I could tell is that beside the fact the routing is just plain bad, there are at least 2 joints where dirt has formed a blockage around 2- 3' after the last piece of exposed pipe.
I've had 4 plumbers out, 2 only looked before I opened up, the other 2 are putting together proposals.
The existence of an iron pipe next to the clay is throwing them off. They both kept referring to it (the clay) as a storm drain. I don't have any doubt whatsoever that the clay was sanitary drain, not storm drain, because I stick a hose down the cleanout at the bottom of the stack, it comes out where the clay pipe was.
I don't care about the storm system because whatever it is, the location is somewhere other than the cut away floor and it should be untouched. I just need to fix the sanitary system and get the house sold.
I don't really care about the iron pipe either. I say put in a new floor drain or whatever it takes at a new location nearby and fill in the old, run the utility sink into the stack above the floor and abandon the old iron pipe, abandon any clay left under the floor and route new PVC directly to the cleanout (which is iron) and tie in at that point. New PVC stack to replace the corroded iron stack.
The backwater valve on the floor drain is probably prudent.
It was suggested I should put in a new utility sink. The old one is concrete.