That's a pretty common problem with the TH 350. The torque converter is draining back into the case, and raising the fluid level above the centerline of the driveshaft yoke. There's a tiny hole in the plug in the end of the yoke just ahead of the universal joint to prevent air pressure buildup as the yoke slides in and out. Fluid will leak out of the hole if the level gets too high. The simple fix is to pull the yoke off the U joint and weld up the hole. If you want to do it "right", drop the valve body off the transmission and find out why the converter anti-drainback valve isn't sealing. That's a BIG job with the transmission in the vehicle!
Jerry

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