Guys my TC is locked at 47MPH in OD. Coming up a 7% grade it stays locked and with my stock 95 it can't hold 55MPH at 1400 rpms in High. If the TC would unlock it could get back into the meat of the power and maintain speed. If I take it out of OD I can only get about 64MPH before it starts to defuel...

any suggestions as to what might be happening?

 

This is not a transmission answer but will really help climbing hills.
Get a governor spring kit in it and a #10 plate.
Let that motor get some RPM's in 3rd.
Now, what happens when you drop it out of OD then back into OD? Does it re-lock-up?

 

What's happening is DC did not match the gear ratios with the torque curve of the engine.
You can fix it by doing what j-fox said. Best fix. Second best is to use the little button on the end of the shift lever, press it and use 3rd gear up to 60 MPH, no problem. TC should lock in third above 47 MPH. Revving 1400 in OD at 55 MPH will not result in much power because the turbo won't spool well below 1500. Then when you finally push up to 1500 and the torque comes on it's too much for the stock tranny and you will get lock up shudder and a bill for a better tranny.

 

gauges and what j fox said... converter and valve body should be shortly after. these mods will liven up your truck and its a whole lot cheaper (and more fun) than buying a new truck. they are just really detuned from the factory and only need a few simple things to get them running with the same power (sometimes more) than the newer 5.9 engines. once you do this you will laugh at steep hills.