I have a 94 f350 idi turbo cc/4x4 with an E40d,U.S. gears over-drive unit, and BW t-case. My problem is that my tranny will kick out of gear sometimes.It will downshift to 2nd and then if it shifts to third it will kick out to neutral, then bang back to 2nd. It only happens sometimes, for days it might shift fine, then,usually,on the way home from work it will act up again.I have cleaned all the electrical connections on the trans, and changed the fluid and filter.Has this happened to anyone else?I am thinking the overdrive unit is causing this.

 

manual lever position sensor. mlps. it is located on the drivers side of the transmission and the manual shift lever goes through it.

 

Do a search on this board to find the info.

Any number of things can cause this....
First is to pull the codes, then clear the codes and see if it goes away for a while.

Second stuff to check is the TPS on bolted on the IP.
Volts should be from 1.0 to 1.4 at idle and about 4.0 at WOT.
You may get a code telling you the TPS voltage is out of range.

thirdis the VSS in the rear diff. determines when to shift based on rear diff rotation.

fourth - change the MLPS to the new make of it (the part from ford comes with the connector changes, and instructions).

fifth - is the OD light flashing when this occurs?

This is a hot topic, and I recently had very similar problems. Search the board for my posts and you'll find out some more info.

BTW - I have the identical truck, so if you need pictures or whatever of wher ethis stuff is, let me know.