Shifter is in neutral. Why is manual transmission stuck in 3rd gear?

If it still doesn't want to move, then the transmission has to come apart and I would suspect you have a broken shifter fork.

so , it seems the engine does start in gear, with clutch depressed.
or cranks , brakes off, and car does not move. with clutch depressed, if yes, then the clutch is not 100% seized.
we now know the trans is in neutral (could be siezed check its Gear lub levels?)

I can not decode, stuck in gear. elaborate that.
nor "
"still stuck"
the only clue here, is
"stalls when clutch is let out."

this last statement makes me presume you depressed the clutch
then turn the key to start, it started
and when you let the clutch out, the engine stalls
does it do that rear wheels (2wd mode) ? lift driving wheels off the ground.... (these proves engine not weak)
yes, transmission is sized.
no, then it is stuck in gear.

I too say its a stuck shift linkage.
Open the link below to see the image.
The bushings (A, D and E) can wear out with time and use. I have seen the joint (at A) that attaches at the transmission get seized too. These parts can be removed from the car with the transmission in place. http://globalcarbrands.com/i/subaru/subaru-shifter/subaru-shifter-06.jpg

Start with the firs post and have those cables and linkage assembly looked at if those are good then what you have is a loose bolt on the transmission that bolt is responsible to keep the gear in place when loose the transmission will do what you described as well nothing more nothing less.

car is in two gears disengauge linkage and put back in Mistral if is a too loader you may have to pull the shift assembly and manually shift thhe gears your shift forks may be bent

Does that transmission have external shift linkage? Sounds like a linkage broke or the neutral gate is way off.

does the clutch push normally or is the linkage broken not disengaging clutch, and then does shifter move around or locked and wont move, loose linkage in shifter or gears are jammed inside transmission and something went, if shifter wont move at all then trans is jammed inside and needs repair.

does it lock up in any gear? sounds like blocking rings trying to stick, what type oil did you put in it?
should take auto transmission fluid

Did you check you gear oil?

why my 2006 corolla car gearbox is stuck in third gear and cannot move