Well I found the problem. It wasn't the second gear band, but the direct clutch. The good news is that most everything looks to be in good shape. I was not looking forward to replacing the bushings. The only wear I found outside the clutches was the planetary thrust washers. Turns out not many places carry them for the 60's trans. Hopefully they don't take too long to come in the mail.
In addition to the bushings, I found additional evidence that the trans has been through before. It had a bolt in spray, and already had a 4.2 lockdown apply lever.