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Since this is a manual trans, thge solenoid is most likely not the problem.
The site below,
http://www.brickboard.com/FAQ/700-900/OverdriveRebuild.htm
will give you an idea of what is necessary to repair.
Since your OD works fine when cold, then gets worse to not engaging when hot, this points to the actuating piston rings. Numbers 50 in the diagram.
Hopefully you do not have the Teflon style O-ring set up. If you do, you will need to replace the pistons as well since getting the teflon O-rings on requires heating them to 200 Celcius then installing. Kinda hard ( and hot) without the proper equipment. Laycock also found out they do not last longer than the original rubber style O-rings.
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