transmission issues.

[saveth]

A friend of mine bought a 2002 pathfinder with a known transmission issue. Anyways, it drives perfectly fine in the first 2 gears. It wouldnt go into 3rd or 4th so I decided to change the solnoid packs on the valve control body in the transmission. Now it goes into 3rd and 4th but there are new problems. When shifting to 3rd, it flares, not a little, but quite a bit but it will go into 3rd. If Im cruising and take my foot off the gas while in D and then reapply it, it will basically be in neutral. It won't find a gear until the engine revs match the speed of first gear. It will downshift like normal if I give it enough gas. So basically, if I leave the gear selector in 2, it drives better than my 2001 pathfinder.

-there were 2 codes, first being bank 1 02 sensor, second was the torque convertor solenoid.
-transmission fluid looked dark but didn't smell burnt.
-the magnet in the pan collected quite a bit of debris. No chunks.
-Worst case scenario is we replace the transmission and torque converter, which is fine since he factored that into the price.

Any help would be appreciated.