Freewheeled for the start.Did the transmission actually engage first or did it freewheel from the get go?
Broken band apply strut for sure. This sometimes happens if you pull it into reverse when rev's are up. Make sure your engine is tuned up and running right so idle speed is correct. You can replace this strut by loosening lock nut and backing band adjustment screw all the way off, and popping new strut between band anchor and lever. Retighten adjustment screw to snug, and then back off 2 full turns. Crank down lock nut, and you are done. I always use the newer A518 pan gasket with the molded-in o-rings around all the bolt holes. These are more expensive than cork jobber gaskets, but they don't leak and are reusealbe.Just installed a freshly rebuilt 727 ( picked up from rebuilder 1 week ago). Installed it, filled it with atf+4. Put car on the ground and immediately did not have first or reverse. Dropped the pan and this is what i found.
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Well the odd thing is even without the low/reverse band working it should still have low/first gear as the sprag (overrunning clutch) will hold just like when in drive in a stock trans. You should have still had first gear but just no low gear eng braking. You may have other problems also. Ron