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It sounds like ATF fluid pressure isn't getting to the right actuators to engage the internal clutches. 90% chance that this is simply due to low fluid level. 5% chance, clogged passegeways or a Valve Body problem (sticking valve). 5% chance of some other issue.
Before starting the vehicle again, pull the tranny dipstick (Yellow handle at the back of the engine bay, has a clip on the base of the yellow part to keep it from popping out). The fluid should be significantly above the full mark if the engine is off. If it's not, add fluid to at least get it up to the full mark, then drive for awhile to warm it up. After a good 20 minute drive, stop the car, work the shifter slowly through down and up a couple times (Park->Reverse->Neutral->Drive->2->1, and back up). Wait 1 to 2 minutes with the engine idling in Park, and then re-check the fluid (with the car still running in Park). Add as much fluid as you need to get it up to the top of the "Hot" marks. The distance between the LOW and FULL marks on the stick should be about 0.5 quarts. Wait a minute or so after adding fluid before checking it, and check several times. Some of the ATF fluid has a tendancy to stick to the inside edges of the tube and give a 'false' reading when re-inserting the dipstick. Your transmission requires DexronIII or Dexron IV, it doesn't matter, and I would advise taking 3 quarts along with you. (you'll probably need at least 2 of them)
If you can, go over and do this before your mechanic looks at the car. I'm betting that you can solve the problem before he has a chance to do something that you'll get billed for.
There's also a quick way to check for proper fluid level in a stone cold transmission (vehicle not started yet). Read the following post:
http://www.brickboard.com/RWD/?id=647879
God bless,
Fitz Fitzgerald.
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'87 Blue 245, NA 230K
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