Ok fluid levels are fine to a-little above full line. So starvation is not an issue. Research indicates that this is probably a K1/K2 spring issue in the valve body. There is a very good write-up on the forum about this and locations for replacing these unit. I've ordered a kit from ebay and will be installing this in the next few days.
If that does not correct the problem, then I have a valve body from another 772.3 that came out of a completely working trans.
The reason for replacing these spring assemblies is that I want to know what is going on rather than just replacing parts (valve body) and not knowing why it's not up-shifting to 4rth gear.
Also I've got a gauge set on order and will post results after the kit arrives.