I have a 2003 SES DOHC and it had two occasions about 600 miles apart where it didn't shift correctly from 1st to 2nd. It was like others have said, where it went to neutral then shifted. Fortunately I let off the throttle before the "hard shift" like others have mentioned. Both times the vehicle was hot. So after finding this thread I decided to try the VSS. I ended up buying one from NAPA since the ones from Advance had bad reviews. I have had good luck before with Echlin parts. Be aware that there are two different models of this part depending on the transmission (count your pan bolts to determine if you have a 17 or 19 bolt pan).
The part is "hidden" behind and below the header pipe on the back of the engine near the firewall. Also you can't really see the connector. I couldn't figure out how to change it out. After looking on line I saw the procedure involves removing the tire, inner fender liner, alternator, crankshaft pulley, etc.. I decided I didn't want to do all this and went at it a different way. So this is why I am writing this post. I jacked the car up and put it on stands. I turned the wheels to the right. I went under the car and with my left arm went through the axle opening and with my right arm went between the transmission and firewall. Feeling for the connector I was able to press the tab and pull it apart. I could not get to the sensor bolt from below so back to the top I went.
I removed the jack stand on the passenger side and lowered that side of the car a bit so I could reach over the fender. Basically laying over the engine and using my left arm with an 8mm 1/4in socket and very small ratchet I was able feel for the bolt that holds the sensor cover on. Then I pulled my arm out and went back in with a stubby flat blade screwdriver. By gently prying while twisting on the sensor it popped out.
Then put a little transmission fluid on the new sensor's o-ring and jack the car back up. From underneath I found I could drop the new sensor into the hole much easier than from above. I then, when back on top and twisted and pushed the sensor back into the hole. I replaced the cover. Then from below again, I reconnected the connector. Note: I reused the metal clip from the old wire.
So far its been 1500+ miles and its shifting very smooth now. I am hoping this have corrected the problem but only time will tell.
Some notes about the car: The transmission was rebuilt 45000 miles ago (when the car had 124000 on it) and I changed the filter and fluid about 9000 miles ago. Prior to the transmission rebuild I had the fluid changed every 36000 miles by a shop that used a fluid transfer machine and MercronV fluid. The part that broke in mine was a piece of steel that hold one of the valves in place. A $3 part for a $1500 repair. While apart they put in new bands, clutches, and torque convertor.
Hope this helps someone tackle this job since it cost me about $45 for the part.
7/29/17 Well after 10K miles I had two of the "shift to neutral" episodes again in a short time and also some strange shifting issues at other times. Also I had several episodes where the car would almost stall at a stop light. I would have to hold my foot on the brake and the other on the gas to keep it from dying. This is the same issues I was getting before. So I pulled out the VSS and took it back to NAPA for exchange. So far after a week of driving it has not done it again. If I had it to do over I probably would have just bought a Motorcraft part since these NAPA Echlin ones are made in Taiwan.