I purchased an 84 300D in August, ODO reads 260K. Car so far has performed wonderfully besides some rough 1-2 up and downshifting. That is, until recently. Last night on my drive home the transmission started flaring during upshifting, then refused to shift into 4th gear. The fluid level was about 1 quart low, and was brown/burnt. (FWIW the transmission was hot, engine running, and I moved the shift selector between gears before checking). After refilling, the transmission would flare between 2-3 and still refused to go to 4th gear.

I have been reading several of the many threads on this subject,but there is so much information that it is difficult to really come up with any sort of troubleshooting procedure.

The things I have done:
Adjusted the VCV, idle vacuum was at around 12-13in-hg, I adjusted it to 15in-hg with no real change in operation. I then adjusted it to 10in-hg (should produce harder shifts, correct?) with no change. I then unhooked the vacuum modulator, which eliminated the flaring, however the transmission will still not go to 4th.

Unhooked the pedal kick down switch, this did not help any symptoms and (predictably) meant that the transmission wouldn't kick down at WOT.

I have also adjusted the Bowden cable, which moved shifts around but didn't affect the flaring.

I am starting to assume the worst, that the transmission may have been on its last legs the whole time, and it has finally failed (or due to low fluid, kicking myself for that one). However I am wondering if I should do some diagnosis on the vacuum modulator, or should I go ahead and change the transmission fluid/filter? Any advice or comforting words would be very much welcome.

Thanks in advance!