Check the vacuum line to the modulator for vacuum. Just went through this with my newly swapped in C6. After driving it 10 miles, my vacuum line came off at the manifold. Thought my new trans was shot, but finally found the line had come off. It acted exactly as you're describing.
Its amazing what that modulator being bad can do, I just replaced mine for the same problem, could manual shift it and be fine, but otherwise it was stuck in 3rd and wouldn't shift down... Replaced it and now have full range 1,2,3, harder shifts, more power, less motor lag, and it stopped a cutting out and lagging that I was chasing as fuel and spark problems.
The upper end of the line should(granted you have a 351M or 400 V8) come off of the vacuum tree on the back of the intake manifold, passenger side, behind the carb. On my78 250 its a rubber line for a couple inches, then goes to metal line that goes to within 4 or 5 inches of the modulator on the trans..
The modulator is a little cylinder about 3" long, 1.5" in dia. As he said, its on the back passenger side of the trans, just above the pan, just in front of the cross member... and in my case blocked by the exhaust pipe, so it might be hard to see.
when you pull the vac line off of the modulator, if you get a flow of trans fluid from the hose or the nipple on the modulator, replace it... its gone bad and is sucking trans fluid into your engine(if you have vacuum there, that is). I've seen them still sorta work and shift like this but its not good for the engine, or running the trans low of fluid.
You didn't say which engine, but they are usually located at the back of the intake manifold, behind the carburetor.
Look for a fitting at the back of the intake that has several nipples on it for vacuum lines to connect to.
This is a '73 390.
This forum is owned and operated by Internet Brands, Inc., a Delaware corporation. It is not authorized or endorsed by the Ford Motor Company and is not affiliated with the Ford Motor Company or its related companies in any way. Ford® is a registered trademark of the Ford Motor Company.