Gentlemen,

Thanks for your replies re 4th gear. All forward gears including this one worked fine before the rebuild. I did not replace the clutch pack lip seals - only the friction material and checked the clearance from last steel to circlip. I did replace the teflon seals and used grease to install - I remember paying particular attention to these and removing the shaft just to be sure they stayed put.
Question: What initiates shift into 4th gear ? Might this be related to shifting/valve body?
The symptom I describes and your replies make the most sense - I want to explore all options before I crawl under to pull the trans for the 2nd time...

Does anyone know of a reputable trans shop in NJ who will work with me? I would like to fix myself but am running out of time.

Thanks,
Rob