VSS= Vehicle Speed Sensor.
It tells the ECM (Vehicles computer), when to shift the trans. It sets the shift points according to speed / acceleration. Yours is a mechanical driven gear with a cable attached to the speedometer in the dash, and the 2 wire ECM connector. This slides into the back of the transfer case, and is held on with a single 11mm bolt.
The gear on it meshes with a larger gear on the output shaft. We change the VSS gear to adjust our speedometer, and correct the shift points when we change tire diameter sizes. There are about 1/2 dozen sized gears, all a different color, for your rig. These gears spin the VSS shaft, and in turn do two things. 1) Spins the speedo cable to the dash cluster. 2) sends a pulse in voltage to the ECM. The faster you go, the faster the pulse signal. Newer models (97.5+ yrs) did away with this sensor, and use a tone ring in the rear differential, and shares the ABS sensor for the same information sent to the ECM. This is why those models have to have the speedo calibrated with a special electronic device, connected to the ECM.
I only suggested checking the voltage on it as another item to check off your test list, as it does play a part in the shifting system. I have had a couple go bad on me, so I know it's possible.
Another sensor that plays a part in vehicle idle, and how it runs, is the Temp sensor. When these go bad, it tells the ECM the wrong temps, and the wrong fuel air mixture, idle speed information is sent out. Some may think the engine is always cold, or always hot.
Your issue is two fold with no O/D & high idle after warming, so it's kind of hard to help on a forum. Normally if I had to answer each issue individually, I would say check the IAC & TPS besides the vac leaks. For the no O/D, I would say check the solenoid and/or the drum band. If the band broke, the clips are what break, and most of the time, they fall off into the pan. Easy to test that, by turning the tension bolt. Count the wrench turns inward, and see if it spins free with no resistance. If there is, turn it back the same amount of turns. Be easy on the bolt when doing this, as if the clip is still good, you can break it off yourself. You don't want to do that. lol
Maybe this guy can help if he sees this. Hey
@NICE59FORDF100 , any ideas?