Thanks for the update!
If the shift rod is not bent near the front end, then yes, the interlock must be where the problem is.
The detent balls should be perfectly round with no marks or flat spots. ......The interlock pin can be checked for length, as per the dimension specified in that Bolens info linked above.
When you re-install the shift forks, remember that they face opposite directions as in your pics.
Please let us know what you find.
I DID fix the problem and the transmission is working fine now!! - I did not find any mechanical problems inside the transmission, but the 1st/rev was indeed stuck and, as you told me, there was NO PROBLEM WITH THE INTERLOCK. The only way I could free up the rod was to rotate the rod back and forth with vise grips and, at the same time push the rod forward with a crow bar. That is when I found the problem.
The 1st/Rev shift rod was stuck because of PAINT OVERSPRAY. When I spray painted the frame the shift rods were in neutral, so paint got on to the forward part of the rods, behind the "knuckles". So I removed all the paint with a wire brush, cleaned and lubricated it. PROBLEM SOLVED!! Guess I shot myself in the foot there!
Do I feel stupid about this - YES! Do I feel a need to openly publish my stupidity - YES! -- It might help someone else avoid this problem. I never would have thought that the tolerances were so tight that a single layer of paint would jam the rod so bad.
Anyway, The upside of this is that I learned alot about Bolens transmissions with all your input(s) and the manuals you provided. I now feel very comfortable tinkering around inside of them. The interlock system (that I didn't know about) is pretty ingenious and quite simple.
Thanks ALL for your help! Paul