OK, changed the contactor plate out, improved the issue slightly, or the complete fluid flush at the same time improved the issue. However the same issue persists exactly.

Checking the trans on the scanner I find that once the trans has disengaged the gear selection on the scanner shows that the selected gear is D or R but the actual gear remains N. This eliminates any electrical issues since it is showing the correct selected gear at the TCM and the valve body is showing that the actual gear is in fact N. I do not believe that the issue is with the TCM since it locks up and selects gears at first so the issue must be mechanical in the trans itself.

The fluid was burnt smelling and the valve body was filthy, the finish on the solenoids showed some corrosion, the radiator is a Behr and the dip stick locking cap had the tab broken off so I believe that at some point the radiator leaved coolant into the transmission and was changed and the trans flushed. It seems that this bought a year or two more use but that the trans is now trash....

I'll be pulling it today and salvaging the parts I can (new contactor plate, plug and probably the valve body) and replacing it with a used unit.

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1971 Porsche 911 Targa RSR rep.
1968 BMW R60/2
1981 BMW R80GS-PD, dual plugs, 1000cc jugs, 10 gal "Gaston" tank.
1982 BMW R80GS-PD, duplicate of above.
1988 Neoplan/Mercedes 40' Bus
2002 SLK32 AMG
2013 Smart Electric