The trans mechanism is designed to lock-out any forward gear if it's already in one. Adjust the 3-4 the way you are to get it to shift into third. Then you have to adjust the 1-2 lever to line up with the 3-4 lever and finally, adjust the reverse lever so that it lines up with the 1-2 lever. That's what the pin is supposed to do, but if the shifter is leaning forward like it sounds like it is, then the reverse lever may be too far back, no allowing it to reach all the way into reverse. Try sliding that sliding nut thingy so that the shifter is striaght up or even leaning back a little bit. I'm betting it's leaning forward right now.
