The valve body has an eccentric vane pump that can fail to make required pressure when worn. Symptoms are much like you describe. The transmission lack pressure to work clutch packs so you get false neutrals then the car dumps into a gear when the clutches do grab. I hope Paul's solution works. Otherwise you may need an ATX rebuild.
Timothy Wright
97 VW
Steve: I've had this problem with my '97 practically since it was a year old. It has always been intermittent for me - first it was once a month, then once a week. It would never do it when the dealer had it. Finally it was frequent enough for it to happen while the dealer had it. Their fix was simply a power flush of the ATX. It nearly drove me crazy that I had to live with the problem for eight months before they could detect it and that the fix was so simple. I've paid twice for them to do it again when the problem returned and the $129 (for the last one) is well worth it to me to avoid the unexpected neutral slam. I believe I've also seen a TSB on this issue - something about an O-ring sticking during the 2-3 shift.
Hope this helps.
Paul Marvar
'97 TR
While driving this morning, I discovered something else wrong with my new (to
me) Gen 3. When I stepped on the gas trying to leave my neighborhood, the car
just decided to rev and not go anywhere. After a few seconds it kicked back in
and then I was fine till I had to stop again. The same thing happened again at
the next light and kicked at about 2K rpm. This kept on happening to me on my
way to school and it just seemed to get worse, dropping into gear at rather
uncomfortable rpms. If anyone could tell me if this is something serious, it
would be greatly appreciated. Could it possibly be a side effect of the
Superchip that has been in there for a while? Any help would be greatly
appreciated. Thanx.
Steve Rollins
97 PG
Panel K&N
Superchip