Lets try this way...

 

We checked the line going from the modulator to manifold. It was full of transmission fluid. Blew if out with compressed air. Replaced the modulator valve. It was a bear. Had to cut a box end wrench in half to get it to fit in the limited work space. Took the pan off. Put a drain plug in it. Cut a gasket. Put Humpty back together. Transmission fluid reads full on the dipstick. No more smoking. That problem appears solved. Seems to shift a bit smoother now.

I don't know why the transmission was 2 quarts low. It definitely wouldn't take any more fluid. Any more put in would be sucked thru the manifold and burnt. I'd be interested in knowing why.

Replacing the the modulator didn't seem to have any affect on the dying once warmed up. I was hoping to kill two birds with one stone. After warmed up it dies about 1/3 of the time when put in reverse. Let it cool and it runs fine again.

Thoughts other than putting in an inline filter right before the carb? This is sounding like the next approach. Figured I'd start by taking off the fuel filter at the pump and see what there is to see there.

 

Paint job looks great!

 

We checked the line going from the modulator to manifold. It was full of transmission fluid. Blew if out with compressed air. Replaced the modulator valve. It was a bear. Had to cut a box end wrench in half to get it to fit in the limited work space. Took the pan off. Put a drain plug in it. Cut a gasket. Put Humpty back together. Transmission fluid reads full on the dipstick. No more smoking. That problem appears solved. Seems to shift a bit smoother now.

Replacing the the modulator didn't seem to have any affect on the dying once warmed up. I was hoping to kill two birds with one stone. After warmed up it dies about 1/3 of the time when put in reverse. Let it cool and it runs fine again. Dies sometimes while in gear. Seems to run smooth until it dies. No missing out, etc.

No idea why it was two quarts down. I'd be glad to know.

Thoughts other than putting in an inline filter right before the carb? This is sounding like the next approach. Figured I'd start by taking off the fuel filter at the pump and see what there is to see there.

 

The modulator was dripping long enough to allow the carb to suck 2 qts of fluid. Either a long time slow drip or a one time big leak, but your engine burned 2 qts.

 

Makes sense.