Toyota Repair: 89 Toyota Camry dies in drive, camry xle, toyota of louisville

Question
I had only driven this 1989 Camry XLE twice when it died as I was driving to work on a long downhill slope on the interstate. I got it to start back up but it died every time I put it in drive. It ran fine in park. I was finally able to crawl the rest of the way to work in 1st gear.

The car doesn't always start back up, but runs smoothly once started as long as there is minimal accerator use, and you leave it in neutral or first gear. It always dies when put into drive.

Toyota of Louisville charged $89 to tell me it was the distributor, and wanted almost $900 to replace it. The "service manager" also said the car does not have an OBC, so there were no diagnostic codes. I had looked it up on the internet so I knew better, and later found the little brown cap under the hood with "diagnostics" stamped on it. He lied.

I did replace the distributor ($99 part, friend for labor), and also the throttle control sensor (friend's suggestion), to no effect. The car still acted the same. The battery drained totally down within a couple of days, so I replaced that, also with no effect. It already had all new belts, hoses, battery cables etc.

The ignition feels wiggly when it is not stuck, and the little button that has to be pushed to "lock" the ignition and remove the key doesn't stay put.
 
Does it need a new ignition or is there some other sensor under the hood that needs replacing?  One guy suggested a new wiring harness because he said the wires were getting hot. I'm not sure he's a reliable source either, though.

What do I do next?

Answer
This car does have onboard diagnostic capability, it is the first generation which is known as OBD1, unless there is a check engine light on the dash on there will no trouble codes in the computer, is there a check engine light on or is the O/D light flashing?
I'm trying to determine whether this is an engine or transmission problem, I have a problem with the wire harness suggestion, I really don't think that's the case, there is something else causing the engine to stall, it may be an engine misfire or a vacuum leak.
I don't have enough information, let me know if any warning lights on the dash are on.
Does the engine perform normally otherwise without any lack of power or other erroneous behaviours?