Jeff's 727 rebuild thread
I'd take a look at the 1-2 valve to make sure it moves freely and the spring pushes it in all the way.
Don't get too frustrated, I forgot the little thrust washer that goes between the mainshaft and the input shaft (slip city). And then, in a hurry to get the transmission reinstalled I managed to break the pump gear dogs. Darn thing actually made it across town into traffic before it died. Oh, and to make matters worse, that 727 was in a Wagoneer so I had to deal with a transfer case. You'll get there.