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I see what you mean about the lack of detail on the bypass valve assembly. :(

Here's the exploded view I'm looking at which is probably the same as yours:

http://www.outdoordistributors.com/pdf/HYDRO-GEAR/319-0650_150071.pdf

Likely a problem in the area of where (25) actuator moves (30) the bypass plate. But what is the $64,000 question. :confused:

Any chance of arm (35) just not being in the right position or slipping on the actuator shaft (25)?

I'm trying to find an external problem so you don't have to split the case again. ;)

No other thoughts I'm afraid. I have not found any postings so far of anyone having a similar problem after putting one back together other then one guy mentioned the bypass plate falling out and he could not find where to put it back even by the service manual on a different model. :rolleyes:
 

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....Next time I buy a tractor/mower, I'll look more at the tranny than the horsepower.
Yeah, that's one area all the tractor manufactures seem to go cheap anymore unless you pay for the higher dollar commercial grade models. I wish my Deere had one of the more stout models of Tuff-Torq in it. It's about half the weight and strength of the old Peerless gear drive that was in my early 70's Jacobsen 8 hp. rider.
 
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