Need some 904 trans help

When I bought this car it had a problem shifting from 2nd to 3rd. I had to rev it high to get it to shift. I figured it was the kickdown as I had had this problem on another Mopar and sure enough there was no spring attached to the kickdown. Somebody in the past had put an Edelbrock 1406 on and didn't attach a return spring. I rigged a clip and spring to the kickdown lever and the car would now shift but it shifted within a few seconds from 2nd to 3rd. I thought I’d get to it later, added a bottle of Lucas as it was low and tore into the front to rebuild the suspension and brakes.

After the rebuild I had the car out and at a red light I lost all gears. I had to rev it high to get it going. Luckily I wasn’t far from home. I checked the fluid, not burned and at full. I knew this was a good sign that I didn’t have a burned up trans. Dropped the pan and found a thin layer of sludge. Ran a magnet thru and didn’t pick up much metal, no big pieces, but the filter had a sticky sludge layer at the bottom. Removing the filter I found a hard dry layer of sludge at the top. I’ve seen this before on cars that have sat a long time, condensation will build up on the filter and the sludge hardens when dry. I dropped the valve body and tore it down to clean, carefully laying all parts out so I could reassemble in reverse. I learned from the trans numbers that it was out of a 1978 Volare and had lock up converter. It wasn’t too bad, some crap caught in the strainer. With everything clean and new shift and kickdown gaskets (as one or both were leaking) I adjusted the front and rear bands. Front tightened to 72in then backed off 2 turns, rear 4 turns. New filter, gasket, cooling lines, neutral switch and since I had it up added new u-joints.

I knew I had drained over 5qt from the trans (at least that’s what I caught) an picked up a bottle of Lucas and 6qts of ATF+4 just to be sure. I added 3qts in to start with then started and put into neutral. I felt it shift into reverse so I knew things were much better and added the bottle of Lucas. It took 2qts more before it was in the full zone.

It shifted into reverse as soon I hit it and backed out of the garage. Put into drive and took off normally. 1st to 2nd was good but when it shifted to 3rd it instantly dropped back to 2nd and then back to 3rd. It did this every time I stopped and started going or slowing and dropping back to second then accelerating to 3rd. Where do I need to look here? Kickdown? I’m thinking I need to back off the kickdown but the adjuster threads are frozen and I soaked it in PB anti-seize but I still can’t get it to turn. Could the spring be too tight? I’m entertaining all replies.