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Does the transmission actually go into reverse when selected and the indicator shows neutral or does it not go into reverse and the indicator displays reverse and the tranny is in neutral?
Does you shift indicator point to "R" when in reverse. The reverse light are switched on by the selector shaft position sensor built into the Parp/Neutral Safety Switch. It may be bad or just out of adjustment.
My first guess would be a faulty neutral safety switch which also acts as the switch for the reverse lights.
I think the switch is mounted on the transmission where the shifter rod extends out. You should be able to unplug the switch and see if the lights go off.
Try to place the vehicle in park, then reverse, move the vehicle a few feet in reverse, then switch to neutral but NOT DRIVE. Attempt to take it out of low again and then go to drive. This is the method I had to use occassionally when my vehicles would get stuck in low.
I'm told and read a sun shell may be broke. Common problem for this vehicle. Shop will possibly rebuild and use aftermarket kit parts to correct problems the transmission had originally. Cost is probably between $1300 to 1600 to repair. Good luck I got the same problem on a 97 Jimmy and 3 shops said the same thing.
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