Code 12 is no signal from the distributor, its normal you will always get a code 12 when the engine isn't running, and when it is running its no longer in the same diagnostic mode. When its running and a and b are connected the ses light shows the o2 sensor, light on is rich light off is lean (might have that backwards but you get the idea). Ideally it is on for a bit then off for a bit about the same amount of time.
How old is the o2 sensor? They do wear out and can fail suddenly. The single wire One you've got should only be around 20-30 bucks. It's kinda like spark plugs, might not be the whole problem but it won't hurt to replace it if its old or original.
As for the tcc, try unplugging the four prong plug on the side, not the two prong speed sensor. If there is a signal trying to lock up the clutch, unplugging it will tell you. If its a problem inside the trans causing it to drag, unplugging it will do nothing. You could also try adjusting the tv cable, just like hotrod said the tv cable will cause a 700r4 to act up.
There are vac operated valves and stuff inside the truck for the HVAC system, disconnect the line that goes into the cab and plug it, if it improves things then the leak is inside.