Thank you for the other symtoms.
Running in second, then into passing (drop down into first), this is good, however, the faster in second, the less it will downshift.
If it will downshift manually, then I'd be looking at the govenor.
Slipping at the high end, this is not good. Sounds like the transmission is slipping, or not enough oil being supplied to the clutch pack to keep it compressed.
Second gear sprag is good, if you have movement. I would smell the operating temperature trans fluid, if it smells burnt, replace dipstick, close hood, bow your head, and say three Hail Mary's.
Compare oil on dipstick to clean ATF, on a white cloth, if black, close hood and say three Hail Mary's.
I would try and adjust the cable adjustment again. Go to the transmission shop and get a book on the th350, there are oil pressure taps on the side of the trans one can attach a pressure gauge, 0-200 psi, see what's happening. One of them is from the oil pump, another is for second gear, and I think, the last one is for third. This will tell you alot. Say if you're watching 2nd, d/shft to 1st, and starts to slip, if no oil pressure, then pump is bad, if pressure is there, burnt clutches.
Overall, it sounds like it may need a rebuild. Drop pan and see what's inside on the bottom of the pan, smell the oil on stick.
[This message has been edited by Everett#2390 (edited 11-29-2001).]