No reverse 1995 E320 & a "lifter noise?"

[rwogs]

I bought a 1995 320 about two years ago and things appeared fine. It would give me a "positive" shift some of the time and occasionally flare going into 3rd or 4th. Well, it suddenly quit moving in forward one day. This lasted a few minutes and then it worked fine for about a week and I discovered that it would not work in reverse. It just revs with no movement. I've read about the reverse clutch pack problems and possible B2 or B3 valve body problems associated with this transmission.
Does anyone have any ideas about what the real problem is or what I should do? I am considering getting a rebuilt from Sun Valley. Anyone with recent experience with them?
Thanks for your help.
Oh, I also have a lifter noise that is starting to manifest itself near the front of the engine. I'm familiar with hydraulic lifters but the ones I've seen as replacement parts seem much shorter than the "good ole US types". Do the lifters usually fail and need to be replaced or could this be something else?