That's right
98rammer has it right, the 160 hp trucks need the 3GSk to run decently, especially in direct or 3rd gear.
You may have low ATF level, I'd check it first. With the stock trans pan it is very important to have the ATF at the full mark or up to 1/4" above the full mark when hot, but not low. There just isn't enough capacity with the shallow stock pan to be even a little low.
You have to be seriously overfilled to cause problems, the ATF level has to be up into the 'zig-zag' on the dipstick to cause foaming. This is over 1" overfilled.
I'd drop the pan, change the ATF, adjust the two bands. The front band [2nd gear] should have 1/4" free play, you can use a 1/4" allen wrench as a 'feeler guage' and adjust as needed. The other method for adjusting the front band is to loosen the adjusting lock nut on the drivers side of the case just above the shift linkage [3/4" or 19mm nut] and then torque the adjusting threaded rod down to 72 INCH POUNDs. Not Ft. Lbs. then back off 2 turns, tighten the lock nut. You will find the free play at the lever to be 1/4"
The rear band very rarely gets worn, [except on snow plow trucks] but it is adjusted similar to the front band, the lock nut is 9/16" or 14mm, and use a 5/16" or 8mm socket for the adjustment bolt. Torque to the same 72 inch pounds, thenback off 3 turns, tighten the lock nut.
When you refill the trans put in 4 quarts, start and put in neutral, fill to the full mark, and take it for a drive, then check again. It is real common to need to add more ATF after the test drive. Use the lowest reading on the dip stick, the bent-tube design of the dipstick tube makes reading the ATF level a real pain, and often the bottom of the stick reads easier than the top. The end of the tube messes up the reading as the stick is pulled out to read.
Let us know if this helps, if you have questions PM me.
Hope this helps, Greg Long