Got the duster out !!! But.....

Pull out the dipstick and check the transmission oil. It should be a nice red color. If it's black and smells burnt, then you might have some serious issues. Black/burnt smelling oil to me would mean that I'm dropping the pan and seeing what if any crud is laying in the pan.
You say your friend didn't really take care of the car, so that may be part of the problem. As mentioned by DentalDart, check the KD linkage.
I have my doubts about the converter causing you an issue, however if you see a load of crap in the oil pan, it will also be in your external cooler and the converter. The cooler you can put a new one in it's place, but the converter should go to a quality converter shop to be opened up and freshened up.
Hopefully there are no major problems with your transmission and you don't have to get it rebuilt.