Ok the C4 on the 65 mustang is not wanting to shift into 3rd gear. When I rebuilt the transmission 1.5 years ago it worked fine. After I had some body work done (sitting for 8 months or so) it would no longer shift into 3rd gear. It shifts good and firm from 1st to 2nd and Reverse. First thing I found was the Modulator valve had been bent so I replaced it. (white stripe adjustable) Second I unhooked the vacuum line from the intake and put a vacuum guage on it and pumped it up. It held fine at 22in. Third I hooked the link back up to the intake and put a guage on the end of the hose connecting to the modulator and fired up the engine. It had a steady 16in. I would assume there are no vacuum leaks at this point. Fourth I pulled the pan and the modulator (needed to fix a leaky gasket anyway) and the valve body to check and see if the valve got stuck somehow. It moved freely (the original pin behind the modulator was removed with the valve). Fifth I put everything back together (breaking 3 bolts after discovering my torque wrench was being a PITA) and adjusted the bands the same way I did when I rebuilt it. After getting the fluid level correct I drove home and did random tests to hear and feel if I was getting 3rd gear. NO DICE!!!! At this point I'm not sure what else to check. Should I play with the modulator valve adjustment to see if I can get it to do anything? Would a burnt clutch pack cause the issue (I'm not sure what that is supposed to smell like from what I've read). Kickdown works properly. I'm at a loss. The car is running 3,650 RPMs at 65 mph with 3.00 and only getting 11 mpg average. The 289 was replaced with a 302 after the 289 blew up. It was getting 17mpg before I had to replace the engine. Does a 289 to 302 swap make that much of a difference in the MPG? or is the issue just a lack of 3rd gear causing the mustang to run higher RPM's. This is my daily driver until I get the 390 (401) back in my 66 f250. Any thoughts as to what else I have forgot or can still check short of another rebuild? Thanks much!!