CEL P0706 - Thud Reverse - LIMP Mode

[sohip]

My 2004 Mazda has a big clunk when I go from park to Reverse. Happens every morning but sometimes doesn't do it when its all warmed up. Also, the PRND lights on cluster will go out and it goes into Limp mode sometimes. Seems like its starting in 3rd gear. Mostly it drives normally with it showing what gear its in and shifting from 1-4. ITS AUTO 2.3L 2004

Any Ideas or leads would be appreciated.

Or if anyone knows how to "adjust" the transmission Range sensor would be great too.

Thanks