The donut thing is a magnet. It collects the debris and keeps it out of the filter. There will always be some stuff stuck to the magnet, that’s normal thrust washer and clutch wear. The stuff that collects in the bottom of the pan is the non-magnetic stuff. You have typical wear, nothing to be concerned with.
If the modulator was disconnected, it’s going to shift very late and very hard. Look around the carb or manifold, I bet you find a vacuum port that’s open. If not, look at the tuneup sticker under the hood, it will probably show where the modulator is suppose to be connected. If not, any manifold vacuum source should work. Don’t use a length of vaccum hose, use some 3/16 or 1/4 brake line. Use rubber hose only on the connections. Vaccum hose can collapse when it gets hot, that will close off the vacuum to the modulator and cause weird shift problems.
As for the filter, the factory used a fiber filter media. I’m not sure what has happened over the last few years, but the fiber used in those filters is much more restrictive than it use to be. Ma y people complain of transmission whine, especially when cold. Use the filter with a brass screen, sometimes it’s listed as the Allison filter. While it doesn’t filter quite as well, the Allison filter will catch any debris big enough to cause problems.