That is highly unusual for a Non-overdrive to be leaking there.
But I have a guess.
When a NEW front bearing is installed, the large outer snapring that it comes with, has to be trashed, and the factory one reinstalled. This is because the supplied one is both thicker and has a larger outer diameter, and the retainer will NOT accept it.
When the retainer is torqued, it may feel tight, but with the big snap-ring in there, it is NOT tight to the case.
Usually when this happens, the retainer is cracked at the boltholes and it will never seal again.
Problem #2
as for being hard to engage first and second;
1) if you're running full-synthetic oil, get it outta there and flush the trans with diesel, at least twice, spinning it both times to flush the diesel into every nook and cranny.
2) Listen I have rebuilt dozens of those transmissions, and not one of them ever liked full-synthetic, it's just too slippery.
The brass rings depend on FRICTION to work, and they have to GRAB the brakes. I have even modified both the brass and the brakes in a feeble attempt to try to use synthetic, and notta chance. Finally in desperation, I flushed the synthetic out and Shazzam, just like magic, my previous recipe worked perfect.
Some guys may show up here with their success stories, they always do, but ignore them; their boxes are one-ofs and are not the norm, get that synthetic out.
3) But if your 85/90 is regular dino-oil, then that trans will have to come apart, for to inspect the brass and to rough up the brake-cones. I do that by chucking each gear in a small lathe, and rough-polishing the cones with 100grit cloth-roll. Each brake has to be polished in a specific direction, to put the screw on it in the correct direction for upshifting; except First gear, I bias that one for downshifting.
All brass rings need to be PERFECTLY round, and sit high up on the cones. Used brass is