engine/trans removal trouble

[guambrocha]

1996 volvo 850 ( base)
Removed my engine to fix a rear main seal. Have it all back together
Problem: gears are not engaging it seems that they slip or engange at some point. When I started the car I did not hear any loud or bad noises. When i installed the torque converter I made sure it was sitting all the way into the transmission until I could not put a finger behind it ( i had about 13 mm from bolt location on torque to edge of bell housing. I also added some transmission fluid into the torque converter as well. When the car is running I see some smoke coming out of the trans stick (not the oil stick, tranny stick)

Help please...