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If the engine is running normally and your drive belt is fine then the input to the transmission is OK you just have no power output from the transmission. Usually those transmissions give you some signs of failure such as won't go up inclines or the top speed is a bit low. What I would do is first check the linkage from the forward/reverse lever to make sure it is moving a corresponding shaft on the transmission itself. If that is good then I would check the fluid level on the transmission itself. This could well require removing it from the tractor. Often the brake pedal is connected to a small disc on the transmission. While you are checking the shifter input to the transmission, you may want to follow the brake pedal rod back and see if anything is broken or disconnected.
The automatic transaxle is driven off a belt that runs from the engine to the top of the transaxle, make sure this belt is not slipping and also ensure the neutral rod in the rear of the tractor is pushed all the way in.
You have governor with a missing spring or it could be in the wrong place. If the springs are all OK then you may have a bad governor gear in the crankcase. This engine is bad about the governor gears bending the governor gear shaft.
I also have a Craftsman tractor with the same problem. Sears repairman said it needed a new transmission and it would cost $1,400 to install. A new one is about $1,000. Anyway, if you remove the battery and the battery tray under the seat it will expose the transmission fill hole (hex). I opened the top and it looked empty. I had a bottle of 90 weight gear oil in my shop and filled the transmission to the top. I have not had any problems with it since. $4.00 bottle of oil verses a new tractor is worth a try.
Two things come to mind. First it could be not getting enough fuel when hot due to carb adjustment being too lean. That could be that the float level in the carb is set too low or the low speed jet is set too lean. When cold the choke circuit in the carb supplies the extra fuel required.
Second in some enjines that have low compression they start cold but when hot the compression drops below 60 psi and makes starting very difficult until engine cools down.
I suspect a fuel problem.