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Originally Posted by PhilD
Water in the tranny is bad, it will not run real well and the engine will surge and all sorts of things as the tranny gets worse, and allows for less/more resistance due to the contaminated fluid.
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Good point Phil, I would add that the mixing of both oil and water changes the surface tension of the liquids allowing air in the oil. Air is compressable and will haper smooth servo and spool valve operations. Mabee this condition was part of the issue as well.