Hi Blueye7 and Glacier991,
Glacier991 is right about a lot of things in his post as to what the problems could be. Go step by step, but I think you may be at a mechanical problem with your transmission. Here is my 3 week saga.......
I have been going through the EXACT same problems and the only OBD II code scanner that read all the DTC codes correctly on my Ford 4R55E transmission is the FORD NGS tester. I finally know what is wrong with my 96 Explorer transmission.
For you Blueye, if that was the diagnosis from the code scanner, "Incorrect gear ratio - 2nd Gear" and the code PROBABLY was P0732, then you need to rebuild your trannie as you have a broken band #2. Tough to diagnose what is wrong from what little you have told us, but from what you describe, it sounds like a broken band #2, a mechanical problem and that you might as well do a complete and full rebuild of the transmission while you have it out of the truck.
Go to an ATRA certified shop. Find one where you live. If at all possible, STAY AWAY FROM AAMCO TRANSMISSION REPAIR SHOPS. They have a horrible reputation in Southern California.
http://www.atra.com/ look on the left at the ATRA website, to find a local certified shop near you and for gods sake, stay at the shop when they open your trannie up and watch them like a hawk and ask them questions. If you live in Southern California, Jul's Transmission in Hollywood on Hyperion, 1-323-666-1955, Gaby the mechanic, is honest and good and diligent. Rare thing these days.
Another option is to buy a rebuilt trannie off eBay, there is a guy selling Ford 4R55E rebuilts with a 2 year 24,000 mile warranty, parts and labor $675, plus $260 RT shipping charges and there is a core charge too and your core has to be rebuildable.... The guy who owns the business used to be a transmission consultant to the auto industry. I emailed him and he was honest and forthright. They do a rigorous rebuild and pressure testing and running of all their rebuilds. The transmission is shipped out in a black high impact plastic shipping case like the Ford factory uses to ship trannies to their dealers. Ask this guy for a local shop recommendation to install their rebuilt trannie, and then call that shop to get a price for the installation and if they will do it. Pretty simple/easy to do with the right tools.
RoadMaster Transmission Service, Inc.
975 Lunt Avenue
Schaumburg, IL 60193
847-524-4857
Monday - Friday 8am - 5pm CST
Saturday 8am - 12n CST
Or you can go the other route and try to fix your trannie locally. Have an ATRA shop, read out the OBD II DTC codes from the truck. If you have P0732, then you have a broken band #2 and need to rebuild the trannie. Have them drop the valve body and look on the passenger right side of the transmission up into a 2"x2" square opening in the upper valve body in the main transmission case and you will see the #2 band. Check to see if it is tight or loose. It is probably dangling down/broken or the band has snapped at some point on the band and is loose. The bands usually break at the attachment points to the transmission case.
You'll have to drop the transmission and rebuild it and you might as well do it completely so it will last another 100,000 miles + and make sure you use Mobil1 Synthetic ATF. I have had great wear on all my Explorers and my cars with this ATF fluid. I now have 126,000 miles on my original automatic transmission on my 95 BMW 325, with fluid/filter changes every 20,000 miles. It makes a huge difference.
While you are in there rebuilding, replace the turbine speed sensor with a brand new FORD factory part, not aftermarket, then use Borg Warner heavy duty clutch pack discs and upgrade the valve body per the instructions here on the Forum with a shift kit and the upgrades to the valve body plate. Check the front and back of the torque convertor to make sure it has not been overheated, and that will show up as a slight yellowing of the metal at the inner edge/diameter of the TC on either side.
You have to give the Forum a little more info to be able to have someone give you an intelligent and informed opinion of what has happened to your trannie.
1. How many miles on you 95 Explorer Sport?
2. Did you check the transmission fluid when hot and on level ground was red and at the full mark?
3. Was the fluid burned/brown?
4. Any leaks in your transmission cooler, or on the trannie case?
5. Any transmission work ever done on the trannie?
6. When was the last fluid and filter change you had?
Before we used the FORD NGS tester on my Explorer, we used my transmission repair guys SNAP-ON tester and a MAC tools tester and the only code we got was P0756, SSB failure, shift solenoid 2. So Gaby thought it had to be an electrical problem, not a mechanical problem as we had checked the solenoids and ALL THE ELECTRICAL CONNECTIONS AND CIRCUITS TO THE PCM and the wiring harness inside the pan to the solenoids. He swore up and down it was an electrical problem. He was wrong. And this is a guy who owns and runs a transmission shop that rebuilds transmissions only. The problem was that his buddy who owned the FORD NGS tester did not tell Gaby about the P0732 DTC code when it came up.... If he had told Gaby, Gaby would have known immediately that it was a mechanical problem, not an electrical problem.
When we used the Ford NGS tester, it read out P0732 AND P0756 DTC codes after driving the 96 Ford Explorer XLT 2wd, 4.0 liter engine, 115,000 miles. P0732 is an incorrect gear ratio and means a mechanical failure in the transmission and P0756 is SSB or shift solenoid 2 not working itself or a problem in the valve body. My transmission repair guy was pissed that he had not used the FORD NGS tester first.
P0732 is a mechanical failure in the transmission. We dropped the valve body and looking up into the case, sure enough band 2 was broken. So we are going to do a complete rebuild now.
End of problem.
The ATSG manual is very very accurate for diagnosing the problems with these transmissions. What are very inaccurate are the OBD II aftermarket code scanners. Get access to a place that has the FORD NGS OBD II code scanner.
The Ford NGS tester can activate all the solenoids individually WHILE THE TRANNIE IS IN THE TRUCK and can test the PCM as well.
Good luck. I just spent 3 weeks fooling around with this problem, but IMHO that was because we thought it was an electrical/valve body problem based on an incomplete DTC code read out from aftermarket scanners that only gave us 1 of the DTC codes, P0756, but not the P0732. FORD NGS code scanner all the way and an honest transmission mechanic/shop...