car: 1990 240DL B230F engine, AW70 AT Tranny

Please note, my sister is my mechanic and does all of the work on my car. These are in her words. I posted about this before, but didn't really know how to describe it.

When we first got the car, the transmission would slip badly in low gear, and lug in the rest until the engine got into about the middle of the power-band. I changed the ATF with fairly decent Dextron III type ATF (Dex II no longer available) and the transmission is much happier, but not all the way better. Note: when I changed the ATF it was so bad it looked like old engine oil. . . Yecch. What is happening now is that the engine/transmission sounds like it is lugging until I get above 40MPH or more. It just seems like it is not going into the lowest gear, and perhaps shifting too early into the next highest gear (or not downshifting at the right time). By lugging I mean that the engine sounds like it is struggling, and the RPM's sound like they are in the low end. Additionally, when I'm on the highway, I get no change in engine speed when I turn the overdrive on and off. not at 50MPH, not at 60PMH, and not at 70MPH. The car eats too much gas to take it over 70MPH. . .

What I have done so far on this transmission: I have changed the ATF, and I have installed new bushings in the shift linkage, so the shifter no longer has the slop that it did have.

Any ideas?

Thanks,
Rosy