Classic/Antique Car Repair: powerglide modulator valve question, 283 engine, vacuum line

Question
Hi,
I have a 1966 chevelle with a 283 engine and powerglide transmission. I suspect that the modulator valve might be bad. I didn't find any tranny luid in the vacuum line itself, but when I removed the valve some fluid did come out of the nipple end of the valve. Am I right in assuming that the valve is likely bad? I also noticed some smoking from the exhaust and tranny fluid level dropping. I assume that no fluid at all should be getting past the plunger in the valve.

Answer
BOB -
 HI ;  You are right there should be no fluid in there.
I would change the filter and fluid when you put the new modulator in.As far as the smoking - there should be no tranny fluid at all getting into the ex.system , if it is I would like to know how, also it would make such a smoke screen. lol.