I've been messing around with chevrolet trannies for awhile now. Sounds like the guys here have diagnosed your problem. The seals are old and hard. If you can get it rebuilt youll save yourself a bunch of money in the long run. Rebuild comes with seals clutches, steels, ect. But if u just have them put some seals in it and slap it back to you, a few months later your going to pay them to take it out again and bust it down again. 500's are cheap for them to do that to your tranny. Down here, if the tranny has to be rebuild we charge 575 labor + parts as required. if it has to be rebuilt but all the hard parts are still good then to have the job done, minimum price, it'll run you about 805 bucks. When you dropped the pan and replaced the filter did you notice a lot of black powder type stuff in the pan/filter? If so, rebuild it because if your making metal then something is worn or not right. It only takes 1 worn friction plate to mess up your whole tranny so it is advisable to just have it rebuilt if you have the money. The 350 isnt that hard to rebuild to start with, if you have any mechanical skills you may be able to buy an overhaul kit and a how to do it book and have it done. I'm 17 and i can build 700r4, th350, and th400. Hope this helped you out. Anyway, just watch out for friction material and/or metal in the pan, thats a BAD BAD sign.

Also just something to think about, 1 bad soft part (friction plate or something of that nature) can start ruining hard parts. Hard parts are what add big numbers to your ticket.