TSB on this issue. Although it is described as applying only to model years 82-86, it may shed some light on the problem:
NUMBER: 86-B-79
GROUP: 7A-Automatic Transmission
DATE: May, 1986
SUBJECT: ENGINE STOPS RUNNING DUE TO TCC ENGAGEMENT WHEN SHIFTED FROM PARK/NEUTRAL TO REVERSE OR DRIVE
MODELS: 1982-86 LIGHT DUTY MODELS WITH THM 700-R4 AUTOMATIC TRANSMISSIONS
Some 1982 through 1986 vehicles equipped with a THM 700-R4 automatic transmission may experience a condition where the engine stops running or lugs when shifted from Park/Neutral to Reverse or Drive.
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This condition may be a result of torque converter clutch engagement when either gear range is selected, and may be caused by improper operation of the converter clutch valve, located in the pump cover (Refer to Figure No. 1).. If this condition exists, inspect the converter clutch apply valve for the following:
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^ Not properly seated or missing retaining ring (item 225). When installing this retaining ring make certain the rounded edge of the ring faces the valve stop (item 226). Refer to Figure No. 2.
^ Nicks or burrs in the converter clutch valve (item 227) or valve bore.
^ Missing, broken or damaged converter clutch valve springs (outer spring item 228 and inner spring item 229).
IMPORTANT: Prior to servicing the pump assembly for the above condition, make certain that the engine is properly tuned to specifications.
Refer to the appropriate Service Manual for removal and installation procedures.
