Thanks for the brake info, but it turns out I didn't fix the transmission after all. I just didn't drive it long enough to warm up the transmission the other night. Its doing exactly the same thing once it warms up and its still giving the same error code. I swapped out shift solenoid "C" per the pdf's you sent me, but the guy at autozone said its possible ford had the diagnostics wrong and it really means solenoid "D" or "E". Seems worth a shot to swap around.
Two local garages and the local Ford dealership said on the phone they could rebuild my transmission for ~$2000, but nobody seemed interested in fixing it. A friend says thats typical when they cant figure out exactly whats wrong with it, they just rebuild the whole thing.
I'd rather go buy a $400 scrap tranny and swap out the Shift Solenoid Body if that would fix it. Ill try the solenoid swap tonight and let you know how that goes.
PS, the pan had very little metal on the magnet, so I am assuming this is a control problem and not a mechanical problem.