b18a-hatch

I have a few problems with my swap... I put in 03 EX AT trans to a 02 AT LX, it locks me into park when shifted into park, I now have an extra gear on my shiter (1st?) which i never had in the EX before. When it is in D the light on my dash flashes continuousely no matter what gear i am in , and when i am in D driving....and come to a stop or slow down, it will NOT downshift, rather it stays in 3rd or 4th gear and I have to manually put it into 2 on my shifter in order for it to go again. Once I hit a certain rpm, I can put it back in D position to remain in 3rd or 4th.
Reverse, d3, and 2nd gear work fine.
I was told D could be flasing if I am low on trans fluid? However, it still does not explain the no downshift while in D. It feels like drive.. is like 3rd or 4th gear.

Any suggestions? Is there differences in the vtec transmission and non vtec? The car i drive being the LX still has the non vtec ecu.