560SEL reverse out

[HuskyMan]

tran had been taking a few seconds to shift into reverse for about two weeks prior to reverse failure. went to the store, got out of the car and there was a plastic or vinyl burning smell coming from the hood. popped the hood, white smoke coming from area between rear of engine and firewall. at that point the car (1991 560SEL) would not go into reverse gear......managed to get it home though...

Question: I have read that tranny fluid might have been sucked up the a line due to a bad modulator. this may have caused the burning smell and white smoke. Also, does anyone know if there is an adjustment bolt on the right (passenger) side of the transmission that can be adjusted to possibily fix reverse gear?