Tranny/Drivetrain issue

[suberec]

I have an '04 300M (auto w/speed stick) that I let my son borrow the other day. While he was coming home, the car seemed to lose the transmission. I got it towed home and started troubleshooting. There are no codes, the engine starts and runs but there is nothing from the transmission in any gear. Actually, even while it's in park, it seems to be in neutral. It was a little low on tranny fluid, but not dry. I topped it off w/ATF+4 and still nothing. I did notice that as I moved it through the gears, that the engine surges. Once I saw that, I noticed that when in reverse, the speedometer reads approx 5MPH and when in drive it reads about 10-12 MPH.
Any thoughts? I'm pretty confused.
Thanks, I appreciate any help.