Help Diagnose this A/C problem.

OK.
This started about 5 hours ago, and I'm begging to get concerned
Have a 2000 XJ 4x4
started getting a funny noise from under the hood shortly after using the AC
Stopped and checked it, and it seems to be coming from the AC (used the good ole baseball bat test.. put the bat to spots and put your ear on the handle to see where the vibrations are the loudest.)
anyways, it's started to smell faintly of burning, almost like oil, but not quite.
and the sound only happens intermitently, getting loud right away, then quieting down, only to get really loud again.
Now here's the odd part. If I turn on the AC, the noise goes away.

So, at this point, I'm pretty much lost as to what's causing it, and I'm worried about even driving it to the shop now...
Anyone got any clue at all as to what this could be?

Sounds like the bearing in the compressor clutch, when off it free wheels around the compressor, when on the clutch locks it up and spins the compressor. I'd get it looked at quick, if it seizes up it could damage the compressor or rip a belt off.

so I guess I'll leave the A/C on when I drive it to the shop.
This actually sounds consistent with the problem, and I had a feeling this was what it would be...
if anyone know something else, please by all means let me know.

Quick follow-up

Drove to the dealer (yay warranty service)
On the way, I had the A/C running.. no noise, blows cold air, seems all good.
Suddenly, I lose a bunch of power, and it starts blowing smoke from the vents.
Pulled over, and popped the hood, and the compressor is just smoking. No obvious damage, or even any ondication of why.
So I turn the engine back on, and shut the ac off, and it just makes the rattling noise, but is no longer blowing smoke.
Anyways, It's in the shop, and hopefully tomorrow I'll know what the hell is wrong with it.. cause other than it being something with the a/c, I'm not sure about anything now.