Mini cooper p1786 transmission code- please help!

[phillyg!]

Hello, I have posted in many mini forums, figured I would try here as well, as I have used bimmer for my bmw e90 as well
I have a 2008 mini cooper base model, and have the p1786 transmission code. I have checked the speed sensor connections and read the live data with a code reader, both looked good. The transmission first would not shift out of second gear, now it won’t shift out of first gear, even manual shifting.
I have disassembled the transmission pan up to the channels to remove the transmission solenoids. (Picture attached)
Does anyone have any ideas of what the issue may be? Your help is much appreciated.