Transmission having trouble deciding what gear to stay in around 35-40 mph.
Just started happening. Fluid is at the correct level and red in color.
Is there a band adjustment that can be done, and is it possibly this?

You've changed the tranny and Torque convertor fluid and installed a new filter, right?
These transmissions are dependent on the proper vacuum. After that checks OK, you can turn the modulator in a 1/2 turn, and see if the shifts firm up.

Here is another option:

Anyone removed a tranny valve body?

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1970 280S M130 engine- good runner
1971 250 M130 engine- #2 rod bearing, gone
1971 280SE (blown engine,parts car)
1977 German 280S W116-only 33 years old