Not sure at the moment, but is there foam on the dipstick after driving around for awhile?What would it mean if increasing rpm made the squeaking stopped in N?
The manual only talks about whirring, knock, buzz and scraping. I dont know where squeaking fits?
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Also, check the shifter linkage to make sure the lever on the transmission is correctly positioned. I don't have my '79 service manual handy at the moment.
Ramble:
1) When the trans is in park, most of the fluid from the pump output goes back to the pan and a small amount goes to the converter. Checking the fluid level in park will cause the fluid level to be high on the dipstick. Torqueflites are checked in neutral, but you already know that.
2) When the trans is in neutral, the fluid circulates to the the converter and fills it and keeps it filled. Torqueflites are designed to be checked in neutral, idling.
3) Trans fluid is supposed to be at operating temperature when checking the fluid level because of the fluid's coefficient of thermal expansion. Again, its designed that way for practically...more likely to check the level with a warmed up transmission than a cold one.
4) Your pan looked pretty clean and you didn't mention any metal chips. Maybe your converter is okay/not disintegrating.
5) Old car and sat unused for awhile? Elastomeric o-rings take a "set" and will permit fluid to leak by internally. I wouldn't expect this to cause noises or create operating noises like you described.
I'm stumped for the time being. I'll sleep on it.