904 no drive

Can you vary the 1-2 shift by the gas pedal, to cause the shift to come in earlier or later in roadspeed?
If yes, then BOTH the throttle-pressure and the governor are working.

To get Third gear (Drive), the Fwd clutch and the Hi clutch need to be working, AND the Second gear band has to release.
Since you have First gear, the Forward clutch is working. AND the KD-Band is releasing.
Since you have reverse, the Hi-clutch is working, as is the L/R band.
Therefore, it would seem that the mechanicals of the trans are all working.
That only leaves four possibilities;
1) manual valve not indexing properly
2) throttle pressure set too high and or in conjunction with the KD pressure set too high
3) Governor not working
4) 2-3 shift valve not working

As for #1, this can be checked from outside the trans.
As for #2, You can try disconnecting the KD completely, and this should cause the trans to very quickly upshift two times. If it does not, the Pan will have to come off.
As for #3, the tailhouse will need to come off unless you can see the governor thru the Speed-O hole with a mirror or boroscope
As for #4, the VB needs to come down

It should be noted that you can install a pressure gauge on the governor circuit and roadtest the car, which should then show a linear rise in pressure with driveshaft rpm/roadspeed.