The trans neutrals out in 2nd gear. 1st and 3rd are fine. Has plenty of power in all gears but 2nd will not hold back.  Was told that a new modulator would probably do the trick but it didn't. Anyone have any ideas?

Try to see if works in manual second. That is, manually shift it from first to second, and from third to second. This will apply the intermediate band. If it has a second gear then, the intermediate sprag is bad. If it still does not have second, the int. clutches are gone. Either way, it is internal, and will have to be removed for repair.
The oil circuitry of the 400 will not allow a shift to third without the 1-2 shift valve moving, and since you have 3rd, it will not be a stuck valve.

 

    Manual 2nd is where I see the problem, if you punch it, it goes ok but when you let off it neutrals out. You don't see a problem if you run it in drive all the time. But there are times when you would like to downshift and have it bark a little bit. It's a very impressive BB. 

In that case, there is a problem with the intermediate band, or the band servo. The band is applied as a secondary "brake" in second, either manual second, or passing gear second, but it has no effect on the normal "Drive" shift into second gear. The int. sprag, and clutches do the most work, and the band adds more holding force on the drum.
You can remove the valve-body, and check that the servo has a good sealing ring. The sealing ring will wear, and, depending on the material used(cast iron, or teflon), could be broken or damaged. There is also a possibility that the e-clip under the servo is broken, and will not actually apply the band. The clip, and/or the sealing ring can be replaced easily. If you find a problem with the servo stuff, and replace the bad parts, and it still doesn't work properly, it will most likely have a burnt band.
I can post pics of these parts tommorrow eve., if needed. It is late here, and this old man needs a nap!!!!

 

    Yeah thanks pics would be great. If what you think is what's wrong does the trans have to come out. Any info is appreciated

                                                                           Walt...

Wow!! What timing! I just got the pics. edited and loaded!!!

Intermediate Servo

Case w/ servo location

The first pic shows what the servo looks like, and the location of the sealing ring. Be sure to check the little "horseshoe" clip on the servo pin. It can break.

The second is of the case, the location of the servo, and the location of the checkballs, just in case you(or anyone else) loose them!

I was thinking, there is one other possibility. I have, in my years of doing this, seen a couple of times where the servo pin had worn a hole thru the band, and created this same problem. I have only seen that happen once or twice, but...it could happen.

If, you do remove the valve body and see no problems with the servo assy., then I would have to say the unit would have to be removed for repair.
Hope this helps some.

Man, your incredeble Joel , CHAPEAU ! i think YOU built these cars.... and not Zora Arkus Duntov ! unbelieveble ... You are the encycplopidia of C3VR , NO DOUBT !!!!!!!!!!!!!!!!!!!!!
PS members don't kill him at PF , we could need him afterworths , just let him suffer for his jokes..... 

 

    Thanks for the info, as I am quite the novice when it comes to trans I will let a professional look at it from here. I have done HVAC for 3o+ years but don't know where to start on a trans.

                                                                     Walt..........

Let's not overlook the accumulator piston in the valve body, they are also prone to breakage although it is more likely on later models with the plastic piston.  There is the possibility the trans or valvebody could be later model than your car.

 

Just my two cents.

 

   Thats a good possibility as there is nothing stock on this car. I believe this car had a frame off at one time. the frame is a nice shiney black and the trans looks new. looks like an aluminum body and a chrome pan on trans.