Try to reset the powertrain control module for 30 minutes by disconnecting the negative and the positive battery terminals. Rubbing both battery terminals for a few minutes, prior for the re-installation.
If that doesn't help, the speedometer is quitting.

See these links and give them a call.

http://www.gminstrumentcluster.com/gm-cluster-repair/


http://www.mrwhizard.com/


http://www.gaugepegged.com/


http://www.ddinstruments.com/index.php

Sounds like the transmission is misbehaving and it's triggering the PCM to flash SES light. Must have code read to localize problem.

reasonable for dealer, yes.
How bad is the pressure sensor is leaking oil will determine whether i would ignore it or replace it. Should be an easy and affordable fix.
I wouldn't condemn the transmission until i have changed transmission oil (flushing) with new filter. After flushing i would keep driving the car for a week or two and sometimes that new oil gets things working like they used too. It could go the other direction and completely trash the transmission.
However, given your situation and need for reliability, i would sell the car and not fix it.

get a second opinion, the chevy dealer wants you to replace everything because its their parts.
Try *spanionneo's* soultion too, a flush, and filter never hurts.

and for it to suddenly start shifting hard , its a trash in the valve problem.

Get a second opinion for sure but not at a dealer. Sounds kind of odd to be quoting a price so high and if I understand your details as they appear, the transmission is not getting an overhaul?? just a valve body oil pressure sensor? No way I agree with that. And make sure they do not soak you for excessive charges for their "estimate". An hour of labor at most, unless you already signed a disassemble and inspect document and then you back out of the recc repairs.

Get a second and independent opinion and repair quotes - the prices given by the dealership are extremely high for the work performed. The parts prices are very reasonable, as stated below.

Here are several possible on-line auto parts sources; www.autopartswarehouse.com, www.1aauto.com, www.rockauto.com. For example, they (RockAuto) list the valve body (remanufactured) from around $116.00 for your vehicle. They also list the oil pressure control solenoid from around $61.00 for your vehicle.

The check engine light has nothing to do with it but have it checked some day . From what you say it would be one of two things . First . Might have the brake shoes on that wheel broke or the pins holding them broke and when you back up they get in a bind . If not then something in the gears in the rear diff is coming apart . Either way something should be making some kinda noise . The brakes will make a dragging noise or the rear diff will be grinding and or clunking . Oh one other thing . The park brake on that wheel may not be letting go . So when you back up it grabs and when you go forward the truck can power thru it .

Mine just did this. The rear wheel brake cylinder was not returning to center properly, causing the brake shoe to wedge when I backed up. Cheap but not a super easy fix. The wheel cylinder was surprisingly inexpensive, but all the brake lines were rusted like crazy. My father also has the same pickup and his did it too. I suspect it may be a common problem. You should be able to jack it up, spin the wheel in reverse, and feel the brake tighten up if this is the issue,

Check the many different on-line auto parts sources; such as - www.autopartswarehouse.com, www.partsgeek.com and www.rockauto.com for the replacement parts - and to compare the parts listings, and applications.

Dup.......................

On some Chevrolet S10 Transmission, the trans dipstick is located left and in front of the distributor cap (4.3L).

Your 1996 S10 Chevrolet might have a sealed transmission, there is no dip stick just a plug to be removed about 5 inches up on the right side of the trans. If fluid runs out that opening, it is full.

See this Fig. Fig. 3: Transmission mounting on 1996-99 4.3L engines

http://www.autozone.com/.../...rGuideContent.jsp

should be right next to the master (brake) cylender