I have a D2 TC in my garage I'll be putting in along with a rebuilt 4.6....at some point. I really like the idea of keeping the manual trans, but the auto I have is free, while a new Ashcroft, and ot so much.
I'd be interested to see if you get it figured out.

 

Okay back again nearly two months later. Got a reconditioned R380 and LT230 from Mr. Ashcroft and did the change out in my driveway. It took me probably 40 hours on jack stands but actually was a fairly straightforward job to my surprise. However to my frustration the sound I was describing was still there! After reconsidering all of the potential sources I found the problem - it was actually my handbrake mounted on the transfer case. I think the drum is out of round and is skimming on the brake housing. When the car is coasting in gear or in neutral at higher speeds there must not be slack in the drivetrain and thus no sound, however when things slow down and play is permitted it reverbs all the way through the transmission and sounds awful. Took the parking brake off yesterday and drove it around for an hour...silence except for the V8. When I was checking for the source of the sound before I took the back prop out and drive it, but I left the brake on...didn't event cross my mind.

I will say I was due for a driveline change out anyway as I was lacking a few syncos, gears popped out everywhere, and my t-case clattered in turns. The new setup is butter smooth and the car is driving better than ever. That said, it was an expensive troubleshooting exercise!

 

What do you mean by "took the parking brake off"? Do you mean you disconnected the parking brake cable at the handle? Or you removed the pads from the drum assembly?

 

ExpeditionMan - in this case I meant that I have taken the drum off temporarily. The pads and linkage assembly is still on the truck. The rear prop-shaft is connected back onto the transfer case but no drum sandwiched in between. I'm using wheel chocks and parking it in gear for now. The pads look okay to me and the tension setting is good, so my guess is that the drum is out of round which caused the banging. Banging now gone with the drum removed.

 

it could be your bias plate that’s causing shifting issues. simple cheap fix!

mine was funky and mechanics were right away telling me my transmission was failing... nope, was the bias plate!

clunking could be transmission mounts or bushings or u-joints.

start small and simple first. These r380s are pretty bomb proof