1995 z28, V8, 150k miles, auto tranny

Driving home after work, stopped for gas, then pulled out and
accelerated, not aggressively (yet slightly spirited) heard a
hard "clunk" coming from the tranny (when shifting from 1-2)
and immediately (it has 1-2-d-D) lost forward movement.

Checked the fluid today, thinking it was so low on fluid that
possibly the torque converter wasnt doing it's job.  The fluid
level was 1 (one) quart low.  Anyway, here's some test
feedback:

* R(everse) - backs up fine - no hesitation from the tranny.
    Shifts right into R and backs up.
* 1 - pushes forward fine, no hesitation from the tranny.
    Shifts right into 1 no hesitation and pushes forward.
* 2 - pushes forward fine, no hesitation from tranny.
   From standing start, pushes forward/shifts from
    1st -> 2nd  with no issues.
* d - no forward movement from standing start.  However,
    if I start with 1st, then to 2nd (or start in 2nd) and get
    above 20-25, then shift into 'd', it will shift into 'd' (3rd?),
    but when the car gets below 20 MPH, it "slips" and
    there is no forward movement, yet engine revs.
* D - no forward movement whatsoever.  Can't
   manually shift through the gears up to any speed
   and get the car to shift into 'D' (4th?)

Any ideas or suggestions?