Next check the kickdown switch to make sure it isn't energizing the downshift detent solenoid. If you look at the accelerator pedal bracket, you'll see a plunger type switch bolted to it:
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If properly adjusted, when the accelerator is heavily applied the pedal arm makes contact with the plunger and depresses it which closes the contacts. This sends power down to the detent solenoid on an orange lead. The orange lead comes through the firewall (in it's own grommet),
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runs down along the LH side of the bell housing and then towards the back of the transmission housing. There is a connector on the outside of the TH400 casing that the orange lead plugs onto. You'll see it when you check your gear shift linkage:
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On the other side of the casing is an extension of the orange lead that connects to the detent solenoid:
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Anyway, if the downshift switch isn't adjusted correctly - and is always closed - the downshift detent solenoid will be energized all the time. I am not sure how much that would affect 1st gear operation (if at all). But it would be an easy test to simply unplug the orange lead connector from either the switch on the accelerator bracket or at the connector on the transmission housing.
If disconnecting the lead regains normal 1st gear operation, leave it off and figure out how to fix it properly later. Not having a downshift function for a while is not the end of the world - you probably won't even notice it. Certainly a lot better than having a useless 1st gear.