My 84 SD does this. The cable separated at the engine.
Replacement is in order. In your case I would bite the bullet and have it adjusted by the dealer. Also a word to the wise...never change the tranny fluid without putting in a new filter. Some will argue this point, but for $25/30 you risk a $2000/4000 repair/ replacement.

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N. Hodges
1994 S350
1987 300 SDL (for sale)