1) Your JD dealer is full of it. If the engine is fine then the tractor should be worth the cost of going through the transmission. This could be as high a 10K if your Dad really messed up all of the clutch packs.
2) Using cheap/junk hydraulic oil in a Power shift transmission can make the PS junk in a short time. So by "saving" a hundred dollars on oil he may have cost himself big money in repairs. The gunk you are finding in the bottom of the transmission is more than likely from condensation. Good hydraulic oil has water inhibitors in it.
The transmission will not fix itself by just changing the oil several times. The clutch packs in a JD 4840 where not the greatest to start with. The dealer will want to put in complete JD reman packs in. They are real high and usually not needed IF the old packs have not been slipped too much. I can usually rebuild the old clutch pack much cheaper if the separators and such are not shot. If the carrier and planetaries are bad then it is a high priced repair.
You need to find a better service place. Too many of the new techs are just new parts changers.
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