DIAGNOSIS That grinding noise is the hard plastic dough paddle hitting against dry flour because there's not enough liquid for it to properly hook and knead. It's designed for specific wet-to-dry ratios.
FIX This is about technique. 1) Always use the dough paddle, not the regular blade. 2) Put ALL the liquid (warm water/milk, yeast if dissolved) in first. 3) Then add ALL the dry ingredients (flour, salt, sugar) on top. 4) Secure the lid with the vent cap in place. 5) Select the Dough program. It should start slowly, incorporating the dry into the wet without that awful dry grinding. If you hear grinding, stop it immediately and add a tablespoon more liquid.
IF THAT DIDN't WORK The dough paddle might be cracked or the drive socket in the pitcher is worn. Unplug the base, remove the paddle, and inspect it for cracks or damage. Also, look inside the pitcher's bottom where the paddle attaches—if it's chewed up, it won't grip properly. You may need a replacement paddle or pitcher.
HEADS UP This setting isn't for super-stiff doughs like bagels. It works best for standard bread, pizza, or roll doughs. Even then, it might not form a perfect ball; you often need to finish with 30 seconds of hand-kneading on a floured surface.