Rebuilt 904, no 3rd gear???

when i did the pressure test on everything, (as in pulling the plugs on the outside of trans and installing a gauge, and running it in gear and such) there was sufficient pressure throughout each test...

Sorry I wasn't clear on which pressure tests, I was referring to doing air pressure tests like you mentioned below. It's really odd that it seemed to pass the air test with a cut seal.
so when i pulled the pan, i pressure tested it with the air gun on one of the ports, sure enough the damn thing leaked. this puzzles me because we DID the air pressure test before i installed it and everything was good, no air leaks.

so now that im here and gonna start getting the replacement parts, anything else you suggest I do? should i use the metal sealing rings like the ones i took off originally instead of the teflon ones that come with the rebuild kit? what would the major difference be?

Like Poison Dart said the teflon vs. steel rings is a debate. Some claim they wear less on the drum and that I can see but at the same time I don't remember having to change more than 1 drum due to wear where the rings ride in 30 yrs of doing transmissions. All I have done in the past 30 yrs. until last year got the steel rings. When I installed my 408 I freshened up the trans and gave the teflon rings a try. Had no problems with them but at the same time I can't see anything they did to improve it. Lastly make sure your clutch plate clearance is adequate.

would it be necessary to pull the rest of the trans apart? my brother doesnt think its necessary, and that this was our problem.

If the inside of the case looks clean I wouldn't worry about pulling the rest apart. I can't imagine you ran it enough to crud it all up. My opinion is you definitely found the problem, or at least one of the problems. The one that I wonder about is why is the front band burned up? That seal had nothing to do with it. Could it be possible you had it adjusted too tight? How many springs did you use in the front band servo?

do you recommend i should block the accumulator because I have a 3000 stall converter? absolutely necessary? id like a firm shift, chirp into 2nd and 3rd gear is what im after. lol

Since traction has a lot to do with hearing a chirp when you shift it's kinda hard to say for sure but like I said I always block it with a loose converter. To get a neck snapping 3rd shift is a lot harder cause for one thing your going a lot faster when you hit 3rd and secondly the 2-3 shift requires perfect timing of the release of the front band and application of the direct clutch. Perfect timing is kinda hard to obtain cause several variables come into play. Unless your car doesn't get great traction and you have a torquey stroker I doubt you'll ever hear a 3rd gear chirp but a nice firm shift shouldn't be a problem. Blocking the accumulator generally only affects the 1-2 shift but I have a theory that it may improve the 2-3 shift a little as well. The reason I think it helps the 2-3 shift also is it lets the front band come off quicker. With a spring in the accumulator and the system pressurized the spring is compressed. When the pressure goes away (i.e. switching to 3rd) that spring will extent prolonging the time the front band is applied a little which can possibly cause 2-3 overlap. Overlap not only wears parts fast but it also robs hp. But there are variables that can blow my theory out of the water such as the application of the front clutch being slow. With that scenario you could have flare up (the opposite of overlap) and that'll soften your 2-3 shift but for the most part overlap is a much more common occurrence than flare up so that's why I block it. I have yet to have someone complain of any trans. I did shifting too firm.