Thanks for your input. Where is the forward drum diaphragm? Is this a valve body component? Mine isn't slipping in any gear. It doesn't hesitate going into drive or reverse. In fact, it seems to do it abnormally fast. I'm afraid I probably do have a mechanical problem. But I wonder how long it will last before it fails. Especially if I install a rebuilt valve body.

 

IF that is the problem, it's the first clutch pack, directly behind the front housing, it's forward shaft is driven directly by the torque convertor. It would be rebuild the trans.
If it were that, it would happen hot or cold, but you definitely have something that is not letting a clutch release fully - I have also seen contamination in the valve body, causing spools to jam semi open when they are hot. If it is a clutch, you will know sometime this week, sorry for being vague but there are a few possibilities.

 

Well I guess the drum finally broke the rest of the way. Now I think she is getting the basic broken drum symptoms. It revs up and finally grabs from a start. It doesn't change gears anymore and seems to be stuck in 4rth gear (1 to 1). It says transmission fault on the dash now. I was able to drive her home and to the shop but she is very slow moving from a dead stop like your driving a manual and trying to start in 3 or 4rth gear. Reverse is fine.