Okay, I have rebuilt the valve body and it still will not shift into third gear until it is driven for a mile or so in second gear. I'm going to buy a new valve body from broader performance next and see if that fixes the problem.

Another problem has emerged; when I do a redline throttle pass up through the gears the trans dipstick pops out about 2" sometimes (not all the time). What could be causing this pressure? And is it related?