Is the shift cable still connected? If it is, the next question I'd ask is what happens when you engage reverse? Does the engine stall as though the transmission is locked?
Apparently, when the forward clutches begin to slip in these transmissions, the plates warp and jam the clutch. When the clutch jams, you loose neutral and when you engage reverse, it is essentially trying to go foreword and in reverse at the same time this the stall.
There are a number of discussions online about this symptom as it appears to be somewhat common. If the symptoms are forward in neutral, and forward and a stalled engine when you select reverse it is time to haul it out for inspection and repair.
Good luck,
Bruce
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