Having the same problem with my 700R4. I pulled the governer and that got my second second gear back. It shifts into 3rd. but slips/spins and no power. It also seems like it stays engaged in netrual. Once I pulled the govener it was easy to see it was bad. The guy at the tranmission parts place told me that I might have a stuck throttle body valve also, but I'm waiting on a friend who works on 700R4's to come by and drive it and see what he thinks before doing anything else.