Ok, the last issue I had with this after the tranny rebuild was the vss circut. I had a bouncing speedometer and it caused enough bounce that the cruise control caused the vehicle to drive like a jack hammer! My initial problem seems to be I "fixed" to many issues at once.

The reason for the van not being able to be on the road was the torque converter locking and unlocking going into 3rd and between 3rd and 4th. Really only a problem at around 25 mph and again between 35-40...not really a non-problem. I switched out computers with a known good unit, traced all kinds of wires and fixed many jacked up spots in all kinds of wires.....nothing changed! I used a pin box to test all kinds of voltage ranges and to see what was going on with the computer at those speeds and came down to "The Vss is out of range" according to the specs I had. So I replaced the vss and remembered to test the RPM sensor/tach sensor which turned out to be bad (as tested against a known good unit).

So with a new rpm sensor and vss sensor, I rolled out of the shop and the lock/unlock issue was gone, but the speedo was bouncing causing the cruise control to not work worth a dang. I talked to serveral people and I ended up testing the whole vss circut, wires, pulling the psom, testing all kinds of stuff,,,,while the pile of removed parts grew like a landfill in the back of the van. I had given up, I thought I could just live without cruise and a bouncing speedo (afterall, I could at least drive it), Maybe it was the psom and who wants to spend $150 just to solve the last of many problems. After having it home today, I went out and decided to not trust the new vss and replace it with the old one!

That did it! Van is running awesome, and I winterized it as well. Cruise works, speedo doesn't bounce and the tranny shifts awesome! The funny thing about the rpm sensor is, I had origially ordered one and almost took it out of the package to install it but I was too tired and had a long drive the next day....the next day is when the tranny blew up, so I took that back to put towards the tranny rebuild

So, if you have odd shifting...check the rpm sensor! mine was completly dead (holding it away from anything that the magnet would stick to, put an olhm meter to it, you should get a reading and it should change as you put metal to it to activate the magnet/circut...replace if necessary)

I am well on my way to idi repair tech status, having tested over 4 miles of wiring in this old van!

 

oh yeah don't keep driving an E40D while in limp mode!
i had to once,but i'll tell you what,i put her in 2nd gear and went slow all the way home nice and easy.i fixed it ASAP before i hurt anything.
here's what happened to me:
https://www.ford-trucks.com/forums/9...-bouncing.html

the speedo bouncing is dead giveaway (since then iv learned) to the VSS.
soooo easy to fix wires/replace and cheap.no need to risk blowing up a trans.
notice i babied mine home,and then asked here asap.

i think a lot of E40D's blow up needlessly like this because people just keep driving them in limp mode.
limp mode is to only get you home slow and easy,so you don't need a tow charge.nothing more.

sad to hear you got a bad VSS right out of the box like that.
i got mine at napa,and i just kept it in the glove box since i didn't need it yet.

 

mine never did go into limp mode, except when I was testing some wires and someone (not pointing fingers at myself) didn't hook up the wiring harness into the tranny! Now I gotta find the receipt for the bad vss

 

well,yeah.no mine didn;t go into the official "limp mode" meaning the OD light flashed on and off either.
but with the speedo going crazy,and knowing the electronic trans relies on the speed for its shift points/gear selection,and wanting to downshift/upshift.it was clear to me,i needed to limp it home.if i tried to keep going normally,she would have likely hit who knows what gear,at what speed,and could likely blow up lol.
wouldn't want the speedo to read low,while going 45 or more,or she'd hit 2nd or worse,maybe 1st gear and clear her insides right out on the street lol.
i noticed there was plenty of time to slap her in neutral (if i was driving right along 45 or more) before it read the incorrect speed and downshifted.there's enough reaction time for when things start to go funny.
i had just started out,and was just going easy at the time,so that helped me figure things out even sooner.i just slowed right down quick.