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I have rebuilt a gas engine and forgot to hook up the modulator valve. It had a vacuum modulator. It would start out in 1st then would not shift. When you let up on the accelerator the trans would just kind of let go.
I have had a lot cars with th400 and th350 GM transmissions. It sounds like a problem in the valve body or an internal linkage. If you can put it in 4lo and it still goes forward when you put it in reverse I would guess its in the transmission and not the engine or transfer case. I would...