There is no smoke and the fluid level is static so based on C32AMG's note, it's probably not be the diaphragm itself. I have not actually measured vacuum at the modulator hose but I can see now that I should have done that first....before replacing the hose. That may have been $17 wasted.
I will test vacuum tonight and report back with the results.

The issue of not being able to fully insert the key into the modulator still bugs me, though. The modulator has never been touched, except for the quality adjustment key, so I'm assuming that no outside force has damaged the plastic shift mechanism inside the trans. Any more thoughts on this, specifically?

Thanks,

Sam