98 Jeep Grand Cherokee -Transmission Shifting 1-3

I'm having the same problem with a 98 Grand Cherokke Limited with the 5.2 motor. I replaced the output speed sensor which is located on the back of the transfer case, but it was no help. I then found out I was actually given the wrong part. It looks the same but the pulse has a different ratio. I'll get the correct speed sensor tomorrow and see what happens. If successful I'll take a pic and upload it to make sure you're changing the right sensor. At Advance there are two sensors that can be used. The first one is a BWD part #S41012 and cost 31.48. The other is a Niehoff, #SN7012 for 42.99.

I just had similar problems with my 98 GC 5.9 Limited, the output speed sensor is actually on the tail end of the transmission, it is not on the back of the transfer case. I got the part from the dealership for $23, and it took care of the shifting problems. You still have to reset the codes after, but it runs like a champ again.