I see from my owners manual that the computer thingy in
my '81 tells the trans to lock up the convertor for
1:1 solid drive. Is there an easy way to tell that this
is in fact happening ?   Not that I'm looking for
something else to fix, but I always like to know if things are actually working or not !!

It is sometimes very subtle, but you can tell if it is in fact going into lock-up. Drive at about 45-50mph, steady speed, and then, without letting up on the gas, lightly touch the brake pedal for 2-3 seconds. You should feel the change in rpms, and see it on your tach(the rpms will go up approx. 200rpm) When you let off of the brake, after a few seconds you should see(tach) & feel what might be considered another "shift". It is very hard to feel on some cars, but you should be able to see the change in rpms on your tach.
Adams' Apple38639.7513773148

One other thing, if you have a broken speedometer cable, which if fairly common in these gems, the lockup will not occur.  One of the things the computer uses to determine whether to lockup the converter is car speed.  It gets this electronically from the back of the speedo.  But, if the speedo is reading 0 mph, the computer will never kick in the lockup.

[QUOTE=Adams' Apple] It is sometimes very subtle, but you can tell if it is in fact going into lock-up. Drive at about 45-50mph, steady speed, and then, without letting up on the gas, lightly touch the brake pedal for 2-3 seconds. You should feel the change in rpms, and see it on your tach(the rpms will go up approx. 200rpm) When you let off of the brake, after a few seconds you should see(tach) & feel what might be considered another "shift". It is very hard to feel on some cars, but you should be able to see the change in rpms on your tach.
[/QUOTE]

Been ski-ing with my daughter (its end of winter here)
so have only just had an opportunity to test this out.

Oops. Uh oh. No joy. Which is what I suspected, as I
figured that if it was doing its lock up thing then
I shouldn't be seeing the rpm rise couple of hundred
RPM immediately on applying a little more pedal when in
the cruise - without an accompanying instant increase
in speed !

Oh well... one more jobbie to add to the list
Thanks for the tip...

Check the connector at the trans for 12V on one of the wires, with the key on. One of them should be hot. Of not, check all the fuses first.
Then check to make sure the brake switch is adjusted properly. With cruise-control, you will have two brake switches, one for the brake lights, and the other, with some vaccuum lines on it, will be for the c-control, and the lock-up cancel.
If you have 12V at the trans, key on, but no lock-up, you could have a bad l.u solenoid, a bad pressure switch, or a stuck l.u. valve. There is also a slim possibility the the T.C. is bad, but not likely, on a 350. You can also have an O-ring, on the end of the input shaft(of the trans), that has gone hard/shrunken. This O-ring seals the L.U. pressure in the T.C.