My 1955 Thunderbird has a Borg Warner T86 3 speed light duty overdrive transmission.  When I lock out the overdrive by pulling out the handle, the car runs fine.   When I push in the handle, the car seems to shift into OD OK, but the whole drive line clunks hard when I slow down to a stop.  It's a very hard clunk.  Not something to be ignored.   I can drive the car without OD, but I'm worried it will break something.

Does it clunk when you have the OD locked out? U-joint maybe?

The drive line does not clunk when the handle is pulled out.   When the handle is pushed in, I suspect the overdrive is hanging up.  There is a huge clunk in the drive line when you are slowing down to a stop with the OD engaged.  I have the car on the lift right now while I rebuild the front suspension.  After that, I'm pulling the engine and transmission to change the heads and cam. While I have the tranny out, I'll check the overdrive solenoid and see what's going on.  The seals are leaking, so I'll fix that too.   The car has a pretty low rear gear.  3,000 rpm in third at 55 mph.  I'm going to need the OD if I ever drive on the freeway.  The OD is a cool feature.  I don't care for the freewheeling part. 

You might find this helpful.
http://www.oldcarmanualproject.com/manuals/trans/Borg-Warner%20Overdrive/index.htm
It's the official Borg-Warner O/D service and operator's manual. 
Freewheeling can be a bit disconcerting until you get used to it. Best not to use the O/D in stop and go traffic and make sure your brakes are good. It shouldn't freewheel until your speed drops below the governor cut out speed, usually around 20 mph.  

[quote][b]Florida_Phil (9/16/2017)"I don't care for the freewheeling part"

A famous race driver once pointed out...."brakes are cheaper than engines". Unless you live in mountainous country, engine braking isn't essential. Some people actually disable the governor so the car always freewheels.

6 VOLTS/POS. GRD. NW INDIANA

[quote][b]Florida_Phil (9/16/2017)"I don't care for the freewheeling part"

A famous race driver once pointed out...."brakes are cheaper than engines". Unless you live in mountainous country, engine braking isn't essential. Some people actually disable the governor so the car always freewheels.

6 VOLTS/POS. GRD. NW INDIANA

I'm an old school hot rodder.  I've driven many a muscle car and I much prefer manual transmissions. The fun of driving with a "stick shift" is feeling the engine in the throttle.   The quick acceleration and engine braking you get with a manual transmission are much of the fun.   I can see the need for OD as a way to reduce engine wear and save gas on the freeway.   I can also see how a house wife would like it as she could leave it is 2nd and drive around town without shifting.  This is the first OD car I have ever driven.  Frankly, I'm disappointed.  The actual performance is not up to the hype in my opinion. If I wanted an automatic, I would have bought one.

I think I would be a lot happier if I converted my OD over to an switch under the dash where I would only use it on the freeway.  I don't drive my projects much and I can afford brakes and gas.  I would consider swapping out the OD for a T5, but I don't want to butcher the car.

I'm not sure what performance hype you are referring to or what you expect? I've used OD trans in almost every early car I have owned since back in the 60's. My current 57 Ranchero and my 60 F100 have OD trans that I installed. The only performance advantage I know of is the ability to run a lower rear gear for around town driving and then using the OD on the hiway to lower rpms.

That is the performance Ford and the other brands that offered OD advertised, better gas mileage and less wear. Also the ability to shift without touching the clutch as long as you're below the governor cut in speed, generally 28 mph. I can see how the kickdown feature could be a little disappointing to someone who's used to driving an automatic. The OD kickdown doesn't have that "kick in the a$$" feeling because the OD is 30%, give or take. An automatic shifts down to 2nd or even low on kickdown. They get away with it because the axle ratios are tall. OD equipped cars have axle ratios ranging from 3:90 to 4:11 or even 4:56 for wagons. 

My assumed hype of the Ford O/D comes from the fact that many high performance Ford cars previous to 1962 were O/D equipped.  This makes sense as the low axle ratio would have raised their performance.  I see now that there were other reasons for purchasing an O/D car other than performance.  It never dawned on me that someone would care about gas mileage or brake wear on a hot flat head, 312 or 352.   Not having to use the clutch to shift seemed even less of a feature.  Having a low axle ration around town with an O/D function for highway driving is a very cool feature I intend to take advantage of.

One more question please.  My '55 TBird has a top loader T-86 3 speed tranny.  I understand this to be a light duty transmission.  Does anyone here know if a T85 will swap into my car in place of the T86?  If so, do I need a TBird specific transmission?