I have 1992 Chevy Pickup 2wd 1/2ton, 350 with 700R4 tranny that went out. I changed it with a another from a salvage yard and this tranny does the same thing.

I have 1st gear and reverse only, is there something else that could cause this or did I just get a another bad one?

Brian

Test drove again and found that if i start off in 1st gear then shift to 2&3rd it seems to work good but still don't have OD. Also my check engine light is coming on now.

Any ideas?

Sounds like a clutch went out in the tranny. I hate to say it, but it looks like you bought another bad tranny.
I would laso check with a Jasper tranny. you get 36 month/75000 Mile warrenty and matches factory requirements.
http://www.jasperengines.com/transmissions-automobile.htm

I used them to when I replaced the rear end in my truck.

I am currently rebuilding a 700R4 that was doing the same turned out the Low roller clutch and output carrier were busted up. Moral of the story, if you get stuck, do not rock the vehicle back and forth.