As the miles start to get up there Reverse parts wear out in the trans and let go. Short version is that the repair will require removal of the trans to get at the problem. Bummer.

Starting in neutral only is caused by a failure of the neutral safety switch. Its located on the driver's side of the trans where the shift linkage goes into the trans. Its kinda a PITA to replace on the 4-M models due the the front driveshaft being very much in the way. Again, Bummer.

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90 300TE 4-M
Turbo 103, T3/T04E 50 trim
T04B cover .60 AR
Stage 3 turbine .63 AR
A2W I/C, 40 LB/HR
MS2E, 60-2 Direct Coil Control
3" Exh, AEM W/B O2
Underdrive Alt. and P/S Pulleys,
Vented Rear Discs, .034 Booster.
3.07 diffs 1st Gear Start

90 300CE 104.980
Milled & ported head, 10.3:1 compression
197° intake cam w/20° advancer
Tuned CIS ECU
4° ignition advance
PCS TCM2000, built 722.6
600W networked suction fan
Sportline sway bars
V8 rear subframe, Quaife ATB 3.06 diff