Toyota Repair: Overdrive, good shape, transmission fluid

Question
Dear Ted,
Many thanks for your answer (at the bottome). If this is indeed an open thermostat problem ar a case of incorrect temperature reading that prevent the O/D gear from engaging, should there also be additional symptoms that point which one it is?
Thanks again for your attention,
Mark

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Followup To
Question -
Dear Ted,
The answer to what you asked me is at the bottom of this page. Right after your questions.
Thanks.
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Followup To
Question -
I have a 94' Corolla with 80,000 miles.

The highest (o/d) gear doesnt engage, regardless of whether the O/D off button is pressed or not. The "O/D off" light responds correctly with the O/D off button, but the O/D gear still does not engage.

This first happened to me about 6 months, but then it would get stuck in the off position for a while and then returned to normal again. This behavior was not affected after I tried to have the transmission fluid changed at the dealership. Then I thought that the problem was related to me playing with the O/D off button, so I stopped playing with it when the car was driving normally and everything was fine for 6 months. A few days ago I took the car to the dealer for the usual service and when it came out, the O/D stopped engaging once again. Now it remains stuck and nothing that I do releases it.

The dealer claims that I need to rebuild the entire transmission. I think that it may be exaggerated because appart from this problem the transmission is in a very good shape. Very smooth and quiet etc. I think that perhaps a knowledgeable technician could pin-point the problem and replace only what needs to be replaced.

Thankfully,
MS
Answer -
I just need to know a couple of things, does the O/D indicator go off and on when you push the button?
If so, does the transmission shift into o/d?
Is the button phisically stuck and it won't move?
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Answer to Ted's questions

1) YES. The O/D indicator goes off and on correctly when you push the button. Even so, the transmission does NOT shift to o/d.
2) The button is NOT stuck in any way.
Thanks for your response,
M.S
Answer -
Thanks for the clarification, there are a couple of reasons this may be happening, there could be a problem with the ecu temperature switch or the engine doesn't reach operating temperature for some reason( a stuck open thermostat could be the cause)the computer will not engage overdrive until it sees the correct temperature reading from the sensor.

Answer
If the thermostat stays open the engine will not get to operating temperature, check the temp gauge on the dash.
Since the temperature sensor for the ecu also is an input for injector duration there could be a driveability problem or a check engine light may come on.