Its been many many years since I worked on the c4. I had an issue with no reverse and found the internal drum band had broke. I believe they have two of these bands inside-one for forward and the other for reverse. Normally when the clutches start to go bad you will have slipping  or it will take a long time to go into reverse. My c4 had bad clutches as well and I would back down my drive-very long driveway, to the main street. This would warm things up enough for me to have forward.

However, if you have a strong 1st and 2nd and no 3rd. It is probably something to do with the band. As for valve body that could be something as well. Not sure about solenoids inside of valve body but they impact shifting as well. I hope this feed gives some insight.
tpk

Try adjusting the forward band in until it is snug then back it out 2.25 turns qnd see if it helps.

If I had a c4 that would only shift 1st and 2nd manually
I think I would be looking for a vacumn line to the modulator?
Bill

Called in a favor with a friend that has a trans shop, we put it on the rack and found several bellhousing cracks, took it out(after removing headers ) and found everything worn pretty good- clutches were about gone, hardened seals and generally due for an overhaul.  We are gonna try to match up some other options first though, possibly something with overdrive.  Or do you think I should stay with the c4?  I did some researching and my serial #'s are telling me that the carb, intake, motor and trans are out of a 67' mustang/cougar.

Not sure of the rear yet.  Looks like an 8", it is five lug (front spindles are four), and it's locked up.  It could be welded so I need to get in there and see and do a driveshaft/tire count to determine ratio as I don't see any tags or any other I.D.  What's a good ratio?  I was thinking 3.23/3.55 would be a nice driving setup with the 3-spd.