I have a 1994 940 with 230K mi which I have been driving for about ten years. The original owner told me he cooked the transmission at some point and had it rebuilt; that was over 100,000 miles ago, it has never been 100% and I honestly didn't think it would last this long back when I bought the car.

The transmission has cut out completely a couple of times, in both cases it was a clogged screen; dropping the pan, cleaning out the gunk, replacing the screen and flushing through the cooler lines did the trick both times. Last night it started slipping again, so today I went through the drill once more. Unfortunately, that didn't fix things this time around.

The fluid was pretty dirty but not burnt, and there was a fair amount of metallic residue on the pan. I don't know how much residue is normal, but the last time I cleaned out the pan and screen was about 20,000 miles prior and it had about as much crud as I found today.

The interesting part is that it only seems to slip when I engage 'Drive', whereas 1st and 2nd gear behave normally if I shift manually (1st, 2nd, D). 3rd gear slips (again in 'D'), but once it shifts into 4th gear everything is honky-dory. I only have a basic understanding of AT's and little experience troubleshooting them, so I really need one of you experts' opinion. Should I assume it's a problem with the valve body, or is the transmission shot?

Regards