Okay, here is how it went.
The transmission acts as if it is in a safety mode. The "Sport" button on the shifter didn't operate, and the car would only go from 2nd to 3rd, with the S light flashing all the time.
I checked the blinking codes at the computers. A 41 from the ECU and a 7 from the transmission.
Changed the O2 sensor and cleared the ECU. The 41 is gone and the ECU is fine.
Talked to the dealer and they said the 7 was for the solenoids on the front top side of the transmission. Got brand new ones and replaced them. No change, and it still flashes a code 7. Although, the button on the shifter works right now and actually turns the S light on and off before you pull it back in gear and then the flashing is constant.
I hammer the gas at a slow roll and the car will actually go down into first on passing gear. But you can't shift down to it, and under normal driving, it starts off in 2nd. No 4th gear.

 

on my 90 ex it came out that it was electrical. when i moved the wires around the tranny would work fine. then after 3 months it just gave up on me.
so check for electrical problems then check the tranny oil. on mine it had black stuff in it.
if urs is the same then save up for a new tranny.