727 shifts into 2nd and reverse at same time

I had a 904 trans in my car that slipped badly and had the B&M kit in it and I hated it. Found a 727 on Craigslist out of a 76 van. Guy said something about reverse going out. I assumed he meant it slipped. Had it rebuilt and put it in my car. Drove around the block. Seemed fine. I turned on to a long street and punched it from first. Trans shifted into 2nd and then a second later the tires locked up and it felt like the car wanted to back up. It released, went about 20 feet and did it again. Babied it home with it doing this every 50 feet or so. Checked under the hood and found the kick down lever had fallen off and was in the far back position. I had forgotten to put the spring on it that held it on. Went for another test drive, slowly. Sure enough, same thing. runs fine in first but 2nd and 3rd is torture. Luckily the shop is less than a mile from house. Drove it over in first. They pulled the trans and said it might need a new case but when I picked it up they said they only replaced what looked like sprag or something. Got about half way home and as I was coming up to a light I heard a little growling. Pulled away from light and noise got louder. Drove another 1/8 mile and BANG 2nd and reverse all over again. I have not been able to find any one who has had this experience. Any ideas?