That "interlock" pin on the third/fourth shift rail needs special attention. It is OFTEN MISSING due to incorrect rebuild at some point in the transmissions life. As the top loaders are OLD trans you can bet someone, sometime had it apart. Did he forget to put the interlock pin back in the shift rail? Pretty common mistake actually. That pin is REALLY small, looks like a roller bearing, drops to the bottom of the case on disassembly. Not "apparently" needed during initial reinstallation.
What does it do? Locks out reverse gear when the trans is in 1st or 2nd gear. You should not be able to shift the trans into TWO gears at the same time, but you CAN if the interlock pin is missing. If your in TWO gears (first or second AND reverse) the input and tail shaft will not turn, the trans will lock up. But the problem is more sinister than this.
You might not be looking for this problem "on the bench" and it is not likely you WILL be able to get the trans in TWO gears after you install the shift linkage. The linkage itself is designed to only allow for ONE gear selection at a time. BUTT the linkage does have enough "play" in it where it IS possible to get the trans "half way" to reverse and "half way" to first. When that happens the gear shift mechanism "locks up", the trans may be in either gear, not likely "nuetral". It takes some "force" on the gear shift to duplicate this nasty little problem and you WILL NOT be able to do it "on the bench". It will show up IN THE CAR, in the parking lot when your try to shift into reverse from first, or from first into reverse. Then BAM, your stuck.
I know, I have my top loader apart right now and after many hours of scratching my head AND consulting with "Top Loader Heaven" AND David Kees eventually figured out the dam interlock pin was missing. MANY thought the problem was:
1. My "imagination".
2. My Hurst linkage was worn out.
I went on a lot of wild goose chases over this!
Well on my way to becoming a side oiler and top loader "specialist"! And thats NOT something I wanted to do when I started this adventure.
In the end, David Kees pointed me in the right direction, but it's pretty tough to rebuild a trans over the phone!