The upshift delay valve delays the upshift from 2nd gear to 3rd gear when your car is cold. In other words, it keeps the car in second gear longer in order to warm up the catalytic converter quickly to reduce emissions.
The usual suspect when you get a code #26 is the upshift delay valve itself, which is located on the side of the transmission. They usually fail because they fail to hold pressure, i.e., they leak.
You can test it to see if it holds pressure by pulling the green vacuum line from a switch that is located on the fire wall, behind your brake master cylinder. It is the only thing there, and you will clearly see a green line and a black line (electrical) going to it.
Pull the green hose, and attach it to a hand vacuum pump, and pump some pressure in it. If it leaks, it will be obvious. If there is no leak, then probably that switch is bad.
There is a lot in the archives on this, too, so try experiementing with the search function.
2001 E430, Bourdeaux Red, Oyster interior.
1973 280SE 4.5, 170,000 miles. 568 Signal Red, Black MB Tex. "The Red Baron".