1:1 is the input shaft driving straight through the main shaft. So ... the issue is the front shift fork is keeping 4th engaged. I suspect the fork got cocked on the install and that's the problem. Pull the side cover for a look. Whether you have trans experience or not, it should be obvious.
Why does a '70 have overdrive - or did you order that ??
I did NOT order an overdrive, but I did request the 3.09 first gear. That makes me worried that they put in the overdrive gearset, which is not what I wanted.
After googling how the transmission works, I’m guessing some misalignment during assembly is causing direct drive to be engaged when the 3/4 lever is in neutral.... just as you said. I’ll find out when I get home after work.
Would have been nice if they’d done a function check before sending it out.
