I have a White Oliver 2-78-25 backhoe.  It is based on the 1650 tractor.  The backhoe was a basketcase when I got it five months ago.  The previous owner had the 283 Waukesha engine tore apart so my first task was to rebuild the engine.  Then I discovered the front wheel bearings were BAD, ball joints shot, power steering unit loose, lots of missing bushings etc.  The machine was just generally wore out. 

Now that I have the hoe running I am having problems with getting the tractor to move.  When I press either forward or reverse pedals the engine revs way up before the transmission engages.  When it does engage it does so with a bit of a jerk then moves off rather well. It moves fine once it gets moving but it takes quite a lot of revs to get it to engage.

My I&amp;T shop service manual has some info. about the reverse-o-torc but one thing that it does not say is what type of fluid I should be putting in the unit.  What should I be using?  I am going to put a new filter on and probably drain out the old oil and put new in at the same time.  

What else could be causing this problem?