Well, I'm not that familar with C-4's, but on any other trans, the transbrake solenoid installs in place of the vacuum modulator. If it's a transbrake valvebody, and it has a vacuum modulator installed instead of the solenoid, it's probably pushing the valve and applying the transbrake. Most brakes only work in low, so the trans would work in 2nd and 3rd....I'd try installing the solenoid.
just a guess,
Johnny