318 rpm drops to 400 in gear WHY???

If its idleing ok until you put it into gear THEN the idle drops that much its a tranny or torque converter problem, not engine. Doesn't have a lockup TC by chance does it? If its bad it will do that. Stock, the car was set up to idle at 650 RPM in drive. With a stock converter that means it would idle around 750 in neutral. By running the idle up to 1000, it just means that the low stall TC is pulling the engine RPM down to where it was designed to be....