Uh oh, I think you found your noise, and why you were hearing a spin down sound.
This is a lockup but the reaction shaft splines should look like this.
Your's have been shaved down.
Good call TailBeast!! There is also a good possibility that the internal splines in the converter may also be fubar'd. I'm not saying they are, but that possibility is there. A good move to send it back to be cut opened and inspected.