If I were checking the car and you owned it I wouldn't worry you with the problem most likely. If I were testing it for purchase I would absolutely note the problem.

There is a good chance that a proper adjustment can take up the slack that is occuring in shift overlap.

Flaring ocurs because the level of shift overlap necessary, changes as the seals get hard and the clutch packs get thinner (longer distance to apply). Because the thing hasn't been serviced properly and because it has the symptoms of wear I give it a C- without even driving it. Unfortunately those trannies are only bullet-proof to about 150k and you are there. They should last you 300k if you accomodate the shift condition and/or keep up with its adjustment.

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Steve Brotherton
Continental Imports
Gainesville FL
Bosch Master, ASE Master, L1
33 years MB technician