John,
You have torque converter clutch shudder. Here's some info I've posted before in this problem.
Short story: You will eventually have to replace the torque converter in your transmission.
Long story: There are a couple of things you can do to get some more life out of your current torque converter and postpone the inevitable replacement.
Torque converter clutch shudder in AOD-Es in 94 through 98 Mustangs is a know problem. Ford has issued about three or four different Technical Service Bulletins regarding the issue, but no recalls!
At any rate, the symptom is a shudder coming from the transmission (feels kind of like you are driving over a series of those little speed bump strips) when you are driving at “light to moderate throttle” (the words in the TSBs).
The problem as stated by Ford is two-fold. The first cause is a breakdown of the friction properties of the older Mercon IV and earlier transmission fluid due to heat build up. The second cause is undersized friction plates in the torque converter clutch in the torque converters on all AOD-Es from 94 to 98. The combination of these two problems results in a grabbing-slipping, grabbing-slipping, etc. of the torque converter clutch during shifts at light to moderate throttle. As soon as you “get on it” the shudder goes away!
I had this problem on my stock 95GT. I followed all the advice in Ford’s TSBs. Replaced the tranny fluid with the new synthetic Mercon V and installed an auxiliary tranny fluid cooler. For the first 2,000 miles after that, I had no more shudder, so I thought it was fixed. But then it came back. (The Ford TSBs say that if the symptom returns within 10,000 miles you have to replace the torque converter because the clutch is just too far gone.)
At any rate, I wasn’t about to go through that expense yet, and I heard about a product by LubeGard called, “Dr. Tranny’s Instant Shudder Fixx”, that was supposed to work some magic on the tranny and stop the shudder. It’s a small 5” long red tube of what looks like regular tranny fluid, but its actually a friction modifier that acts on the torque converter clutch friction surfaces. About $10.00 to $15.00 bucks a tube depending on where you get it.
I put one tube of that stuff in my transmission, cycled the gear shift lever through the gears, backed out of the driveway, and drove off. No shudder!!! Gone!
So, for $10.00 bucks or so, I’d say give it a shot. It’s only 2 oz. of fluid so you won’t have to drain any out before adding it. Just add it to what’s in there now.
If you can’t find the stuff at a transmission shop, here’s their web site. You can buy it direct from them on line.
www.lubegard.com/automotive/index.html
From their home page, go to Transmission Products, then to the link for Dr. Tranny’s Instant Shudder Fixx.
After about another 2,000 to 3,000 miles the symptoms returned. After that, even another tube of this stuff would not stop it. The problem is that the torque converter clutch friction plates are just too burned/glazed to recover.
You’ll eventually have to replace your torque converter.