The '84 300CD I bought had a similar problem.
Fluid change (including converter), filter change and trans-x and it shifts like a tranny with 100k miles on it
.
When I drained the fluid out... I learned what burnt transmission fluid actually smells like.
In fact, that reminds me.. I wanted to do a 2nd fluid change after a thousand miles to be sure I got all of the nasty stuff out. its been about 1k miles.. time to do it again to make sure I get all of that old worn out fluid out.