727 transmission wont upshift

It's normal to check way overfull when the engine is shut off. All that matters is what it checks in neutral with the engine running. If it doesn't read on the dipstick that means it's real low on fluid and possibly why it won't shift. No idea why the baggie is wrapped around the yoke unless it's a horrible attempt to contain fluid from a leaking seal. I highly doubt that's what's causing it to spray on the windshield but something must be leaking bad for it to do that. You have to determine where the fluid is leaking from and fix it. If it's spraying like you say it's no wonder it's checks empty in neutral and won't shift. If you can find and fix the leak and get it full of fluid it might work right if the clutches aren't toast from being so low on fluid. First thing I'd look at are the trans cooler lines. All it takes is a pin hole in one and it'll spray like crazy. If things are oil soaked sometimes it's hard to tell what's leaking. You might need to power wash it clean to see where it's coming from

For the moment I'd work on stopping the leak and getting it full of ATF then if it doesn't shift check the governor.

These sound like easy repairs to me but then again I've been doing it for 33 yrs. I don't know your mechanical level is so I can't say if it's time for you to take it to a shop. You have to make that determination.