I have a 240D (which has been referred to several times by my father), and it appears to have an issue when down shifting (it is an automatic).

The timing for down shifting is off, and it seems not to want to coast but instead down shifts when I take my foot off the accelerator (when going over 20 mph) speed I am going. I think it is the shift from 3 to 2 that is rough (it seems like it should shift at around <25 mph. but once or twice, it has down shifted at close to 40 mph), and other shifts don't do this. If there is enough distance, i am able to let the car slow down to under 25, while still giving it a little throttle, but the second i lift my foot, the car down shifts.

Also the down shifting is harsh (the up shifting is smooth). It seems like the whole car jumps back.

What do you think the issue is?

Sorry about making a long post, but I wanted to give a lot of information from the start.

 

Some missing info here is the last time the Transmission Filters were changed and if the Fluid level is up to par.
(I had a trans issue that went away after I changed the Filter.)
Just saying you have a 240D is not enough either. How about the year and also the mileage on the Car.

the next basic thing is to check the Vacuum from the Vacuum Valve on the Fuel Injection Pump to see if it is OK. Here is an article.
http://www.continentalimports.com/ser_ic20242.html

Part of what you say sounds like a Kick down Switch Issue
The comments from the Transmission reapair manual are a little cryptic so I will give it to you and see what you make of it.
Complaint: Automatic, unwanted downshifts outside partial Throttle downshift range without actuating the kick down switch.
Cause/Remedy:
1. Remove kickdown magnetic Valve. CheckO-ring on magnetic valve for damage,
2. Check wether kickdown switch sticks in the pushed down position,
3. Check whether magnetic valve sticks in the open position and renew magnetic valve, if required.
#2 Is the one easy to look for. The Kick Down Switch is somewhere under your Accelerator Pedal. When it works like it is supposed to when you step all the way down on the Accelreator pedal it drops you to a lower Gear. When you let up on the Accelerator Pedal the Switch is supposed to pop up and you return to your normal gear.
When is stays on all the time odd shifting happens.
So look at it and see if it goes on and off. Or disconnect the wires to it and see if that changes anything.

 

I looked in another Trans Manual and the Magnetic Switch reffered to in the last post is the Kickdown Solenoid.

 

I realize that my op didn't have the year (1982). (i think i deleted it in editing)

As for the kickdown, it works fine for me, and it doesn't stick. Like if I'm going on the freeway, and need to get up to speed, it does the job, and seems to do it right. The problem shifting occurs in deceleration, but i suppose it could be affected by the kickdown switch acting up. however, i had the idea that this was a vacuum issue, as I have encountered many of them so far. (also, when i use the kickdown intentionally, it doesn't shift rough or anything)

 

The mileage is 205,000, and it starts up easily (decent compression?), and the valves were just adjusted. I am still going through the regular maintenance, as the car came without records. So, I don't know when the transmission was last flushed, but the fluid is at the correct level (I am planning to have the tranny serviced and fluid changed, so they can do a flush and also drain the torque converter better than I can).

 

so i took the car in for a diagnostic, and the man wasn't really sure about the problem. he did think that the car had low performance (I'm not sure if the guy knew that the car is slow or if he isn't familiar with 28 year old diesels), and that there isn't a problem with the transmission, but rather either the engine or vacuum pump

so when we got home, we checked the line to the pump, and it held vacuum and created 22" Hg at idle, but when the throttle was depressed, the vacuum didn't change. apparently it should change with engine speed if it is functional.