I like the sound of that (your suspicion, not the grinding noise). I'll check that out tomorrow and report back.

Yes indeed, it does have OD (I just replaced the fluid). I'll check the lockout collar. There is an external lever attached to the OD housing which is connected to a fixed tab 12"-15" towards the front of the car by means of a length of baling wire (!). Just guessing here, but I'm pretty sure the baling wire isn't factory. Hard to tell how much further back the lever would be allowed to go without disconnecting the wire. I'll have to check my Warner Automotive (Overdrive) and Service Training manual for the transmission and see what that lever does internally.

Howard -
Direct speed switch and vacuum supply on/off solenoid are OK. And as you say, the only noise associated with clutch activity would be throwout bearing, but that is definitely not what I'm hearing. Still, thanks for the input!

BTW, in case anyone's wondering, my screen name has NOTHING to do with transmissions; I'm a technical translator (German) !

Thanks, I'll check all that today. Already have it up on the lift.

Clipper 6 cyl. with Electromatic clutch, 38k original miles. When letting off the gas in any gear there is often a grinding noise as if one were attempting to shift into gear without using a (standard) clutch. Yes, sounds like grinding transmission gears. Loud and disconcerting to the point where you want to pull over and stop. I'm pretty sure it IS the gearbox I'm hearing - it's much too dramatic to be just a pawl -, but can't wrap my head around what in the Electromatic system could possibly cause the drive train to force a shift; slipping OUT of gear would be a whole lot more understandable. Doesn't do this all the time, but often enough that it seems imprudent to drive until this is resolved. Again, all it takes to cause this is to let up on the accelerator pedal, we're not touching the shift lever here.