[Jeff Lee]

That's some great mechanical detective work. I've had similar problems with camshafts of all things. Same issue as your spool valve; camshaft journal (which is ground from a "spool") that is off center in the cam tunnel and protrudes into the lifter bore ever so slightly. Of course the first time you don't notice until the cam is installed, degree'd, etc. Take it out and put it in the lathe. I've had this happen 2 or 3 times. And I guess everybody with a trans valve body will be taking them apart this weekend!