Drain it and see what comes out and drop the pan and see what is in the bottom.

When I had shift issues changing the filter and fluid helped for a while.

Part of the issue sounds like a classic in B2 piston or band failure but normally when that happens you are supposed to have reverse.
I don't know if the B2 band breaks if you can still get reverse.

Way in the past people have had springs break inside of the valve body.

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84 300D, 82 Volvo 244Gl Diesel