O/d Off Flashing Van Starts At 2nd Or 3rd Gear

Hello I have an AWD automatic previa model 94, lately the O/D off drive start flashing and car will not start at 1st gear, it seems like even when shifted manually it will not go below 2nd gear. Question 1: is it likely to be a problem in the tranny itself- like bad solenoid or more likely to be some outside sensor? I do have another tranny that I can replace the current one with and if it is likely to be an internal tranny issue I will not waste time on guessing and diagnose Replacing the whole tranny is fairly simple and I know it was working well Question 2: the above tranny was mounted in that vehicle after the previous owner damage the original awd tranny, so for few years the originally AWD van was actually a 2WD, When I got it I purchased an AWD and after retrieving the front and rear shafts I had again an AWD previa, so the question is- can I replace the current tranny (AWD) with the previous 2WD tranny after transferring the output differential case from the AWD tranny to the 2WD- actually transform it to an AWD tranny actually- I have been told by a mechanic that it should be possible but want to be sure.thanks Avishay