Well today I re-examined the valvebody and B2 and could find no faults, so I put it back together with new fluid. I continued to check vacuum lines, bowden cable, kickdown wire, anything I could see or think of.
I had not driven the car more than 50 miles since this it has started slipping and have changed the fluid for the 3rd time now. I have lost my borrowed car so today I had no choice but to start driving it again.
It slips/shudders at take of, but if done very gently it will make it to any speed I want to go, but again, any sudden throttle increase will induce slip/shudder.
Considering the complete lack of fiber, silt ,chunks or even a burned smell, I am not convinced this 39k trans is shot.

Comments are welcomed

So I just drained the trans fluid with the "Lucas" , and refilled with DexIII, and I have adjusted the modulator.
One question about the modulator, does the flat tab have to be pulled out to adjust it? Because I was able to turn it without pulling it out-I went 1 and 1/2 turn clockwise with no change in trans operation.
Thanks, Michael

Today I replaced the modulator. Weird thing is that absolutly nothing is different, how can this be? I have read that modulator adjustment is very tricky but just popping this thing in and driving has produced NO change at all, I then turned it up a full turn and still absolutly the same. (has strong vacuum to mod.)
I then drained 3 qrts and refilled with B&M trick shift, again, no change.
Somebody please give me a tip here.
Is this just a worn out set of clutches? or possible an adjustable issue?

Today I turned the mod up 7 turns until it stopped, absolutly no change in trans slip or shifting. What gives? I have read that at this point it should be slamming into gear but it is unchanged.
Also, has anyone read of a bulletin to shim the shaft to reduce clearance in the modulator?

Well I appreciate your replies, but today pulled off the vacuum line from the modulator and the trans still is unchanged! I expected it to just slam into gear but still thunks nicely into each gear and doesn't slip until significant throttle is applied. And now that it's real cold out it slips even less.Weird. A call to the local MB dealer informs me that if it slips with the vac disconnected that the problem is definately internal. Anyhow this car is now parked and you will soon find it in the classifieds.
Thanks all.