Well now we have some more information. I can't answer for the valve body but like TRENDZ says a normal 518 will not allow OD until it's in 3rd gear. Maybe, possibly, the transgo modifications allow this. This could possibly have done some damage, I don't know.

Mike, did you take the OD unit apart when you dealt with the governor valve? I have seen the small bushing between the intermediate and output shafts crack and break into small pieces. This could possibly be jamming the inner race of the over running clutch.