BW T35 no forward movement

Great Forum, I finished up a C10 project with my eldest son and now I have a new project car for my younger son, a 1965 AMC Rambler Classic (4 door). This is my second AMC my first was my first Car back in 1975 a javelin. The Classic is a bit different than anything else I have worked on. I have not been able to fully understand the issues I have with it. The BW T35 works in reverse no problem, it was moving forward in D2 but now, not so much. The rest of the car is in fantastic condition, needs new paint but all the trim is there and very clean. Engine starts up quickly and runs smoothly. So I think if I can get my head around figuring out what is going on with the T35 it will be a great daily driver for my son. So I have purchased the TSM and found a Motor’s Automatic Transmission Manual that covers the Rambler BW’s as well as many of the older transmissions. So, I think I am set… but not sure where to start, I looked at the diagnostics chart but I don’t see anything specific to my symptoms, no forward movement in any forward gear. I have jacked up the back end and with the engine running started it in L (removed NSS) the driver’s side wheel does spin, when I shift it to D2 (one click up) I don’t hear a upshift, but the car currently does not have a muffler so it is a bit loud in the shop.
I have pulled the T35 pan and the fluid is clean doesn’t smell “burnt”.
The throttle cable “pressure and kick-down” is attached internally and seems to move freely in the sheath. In the TSM it says to set the cable when at hot idle, for “free pin” I expect that to mean: Take out the cotter pin, holding the pin (clevis) in the linkage and adjust cable so the clevis slides in and out of the linkage freely. Once this is achieved adjust the cable 2 more full tunes (pulling the cable out, towards the carburetor) and the adjustment should be complete.

Is my understanding correct? Also, what next to troubleshoot the transmission, I am more visual then not so I will have to read the TSM several times to “see it” in my head. I hope I don’t have to pull the T35 but I can if I need to. I have done complete rebuilds on TH400’s and TH350’s but this BWT35 is more of a mystery. Your help and guidance to a AMC newbie is greatly appreciated.

Details, 1965, AMC Rambler Classic 770 4 Door.
Engine has a J in the casting so I think it’s a 199 from 1969 1bbl
Transmission: T35 

Edited by mspencer - Jul/17/2014 at 8:38pm

D2 starts in 2nd. While the pan is off adjust the front band. D1 starts in 1st. shifts to 2nd. then 3rd.

I generally say to start with pulling the valve body and give it a good cleaning, but with burnt up clutches looks like you found your problem! Still make sure the valve body is clean. Someone may have run it a bit without the cable attached and/or adjusted properly -- that will burn one up pretty quick! You adjusted it right. You can run 1/2 to 1 turn further out on the cable, but if you go too far it will kick-down too soon -- you'll be using 2nd when you just need a little more gas to maintain speed up a hill. I found that out the hard way! At least it won't harm the trans though. 

You never mention the sprag clutch. Is it installed correctly? Will the car move in reverse?

But don't push hard on the gas if it engages. If it feels like it's in reverse and first at the same time, then the pinhole in the accumulator modification probably wasn't done and the valvebody wear is messing you up.