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OP received the preform packing and rebuilt the air cylinder. No problems now.:beer:

Neutral or any forward gear or you could say as soon as it goes into neutral from reverse it is in forward sprag and any forward gear you select it is in forward sprag. Hook up the cylinder air lines and see what happens when you go from neutral to reverse and then back to neutral. Should have...

You still have the supply air line hooked up so the poppets have air. The shaft that moves when we go from reverse to neutral has dents in it. So when you have it in neutral it will leak air now and if you go in to reverse it will leak air. You are just moving the shaft just enough to be in...

Found it. I still have a rebuild kit I was going to give another member but never heard back. If you want it free just pm me your name and address and I will ship it out. https://www.steelsoldiers.com/showthread.php?180693-M813A1-Transmission-Air-leak&highlight=transfer+case+air+cylinder

No rebuild the transfer case air cylinder. I will see if I can find my thread or post about doing it as it should help.