I would pull the cover on the governor and check out the governor. I believe if you rotate the drive shaft the governor should spin as well. If it does not then you've like run into a broken gear.
Check out some pics here from mine:
'91 300D trans stuck in 1st gear...
__________________
Cruise Control not working? Send me PM or email (jamesdean59@gmail.com). I might be able to help out.
Check here for compatibility, diagnostics, and availability!
(4/11/2020: Hi Everyone! I am still taking orders and replying to emails/PMs/etc, I appreciate your patience in these crazy times. Stay safe and healthy!)
82 300SD 145k
89 420SEL 210k
89 560SEL 118k
90 300SE 262k
RIP 5/25/2010
90 560SEL 154k
91 300D 2.5 Turbo. 241k
93 190E 3.0 235k
93 300E 195k