I finally got that P0734 4th gear incorrect error fixed. Here's what I did
If P0734 appears alone, that means your transmission has internal damage. There are only 3 options:
1. replace the tranny with a used one.
2. Rebuild the tranny
3. you order some parts and DIY
The 1 and 2 option both cost more than $1500. I'm not sure my old car still worths $1500 so I opt for choice #3. After extensive reading, I think I have that overdrive clutch bearing that's exploded. Due to a faulty design, most of the P0734 failures are caused by this exploded bearing. To find out if you have this problem(first, if you have a P0734 code ALONE, without other codes), drop the transmission fluid pan and see if there are shredded metal pins on the magnets. If you do, congrats! you are very likely to have this problem.
Luckily, it's not that difficult to fix. You don't even need to remove the transmission from the car. You need to order a new bearing kit from whatever it takes transmissions(forgot the exact URL but you can google it). The part number is 42220LK. You get a torrington race bearing, a bushing and something I can't name.
Here's the steps:
1. Jack up the car, use jackstand to support the car. remove driver side wheel.
2. Drain the transmission fluid.
3. remove all the nuts(use 12mm wrench) you find on the transmission's end cover. The top nuts can only be accessed from the top, and the only way to access them is to remove the battery, the battery tray and the air filter assembly first.
4. Use a hammer to gently hit the transmissions end cover. This will make it loose. Don't hit too hard! When it's loose, pry it open with a flat screwdriver. When the end cover fall, catch it and inside it you will find the overdrive clutch drum, and possibly the overdrive clutch itself. Note, there's a wire connecting the end cover to ECU, don't mess that up. Let the end cover hang by that wire.
5. Now, between the overdrive clutch and the Drive gear(which is the big black gear that stays in the transmission), there should be the cup race, bushing and the torrington race bearing. You may not be able to find all of them though. I didn't find my torrington bearing. It's probably already shredded to little pieces. Put the cup race on first, the cup should be facing the drive gear. Now put on the bushing, then the torrington race bearing. The little needle bearing should be facing the drive gear too.
6. Assemble the overdrive clutch and drum together, and put them in the cavity of the end cover, then fit them back into the shaft. wiggle them in and carefully attach the end cover. Make sure you align all the nut holes.
7. screw back all the nuts tight. The transmission fluid will be pressurized when the car's moving, so make sure the nuts are tight otherwise the fluid will leak. Put back the air filter assembly, battery tray and battery. Put the wheel back on. screw the transmission fluid pan nut tight(make sure it doens't leak). Lower the car.
8. Fill through the ATF dip stick. Use only SP-III compatible ATF fluid. I bought 2 gallons at advancedautoparts and they are not that expensive. $17.99 each gallon. It turned out I only need a little more than one gallon.
9. Turn on engine, step on brake, put the tranny in R, N, D, 2, L position 10 seconds each. Put back to P. Stop engine, check transmission fluid level again. Add a little if needed.
10. Test drive the car. Now the P0734 service engine soon light should be gone. The tranny should be shifting as it should(no stuck in 3rd gear anymore). Reward yourself with plenty of beer.
Total procedure takes about 4~6 hours(I did it slowly because I've never done it before, and many steps I have to figure out how to do it). On a difficulty scale 1~10(1 being easiest, like changing oil), this job is probably difficulty level 3~4.
If you can do it, congrats, you just saved yourself $1500. Cheers!