new 42rh a500 rebuilt transmission problem

Did you do an air pressure test before putting the valve body on?I think the air pressure test will be revealing.I would go straight to the air pressure test.I have a feeling your tranny is catching 2 gears at once, or one is not releasing, and Im thinking its the second gear (KD) servo.I would also pop that piston outta there and inspect it, especially if the pressure test is ok.
From your description, we know that the rear clutch is working, and so is the L/R band. You say manual 2nd is no where to be found.and when you shift to Drive something happens, so very likely the front clutch is working ok as well. And the VB swap proves its not in the VB.
That just leaves the KD servo.SO, Actually I think Id go to the KD first.
Im trying to figure out how the KD band could be stuck on, and the tranny still get low and reverse.So far it escapes me. Im reviewing the manual.