Physical Dynamics is perhaps the most computationally intensive operation you can do in SWX. Gears are one of the most difficult to do on top of that because you probably have an actual involute shape and you probably have zero/minimal backlash - there is literally no room for the parts to move without overrunning their position. Unless you are moving one of the gears very, very slowly and are very, very patient you will not even get good results. A slight movement beyond what the physical dynamic calculations can keep up with will cause everything to bind up. Don't be surprised if you get a bunch of crashes doing this either.
One of the things SWX has done to make this easier is to provide gear mates, which work well to keep the proper turning speeds/displacements between gear components. Instead of physical dynamics for anything complicated, such as gears, you will be better off with proper mate schemes and doing a simple motion simulation.
I've seen and done some really cool things with physical dynamics, but due to the required computations for anything more than a very simple mechanism I now only use the motion simulation.
Yap thanks for the infomation and some tips,