After talking to a trusted shop mechanic, he said my problem is a bad clutch! If that is true, what would that have to do with locating 2nd gear? There is no clutch disk slipping or problem with other the gears! What would mechanically change the operation of 2nd gear? Anyone have any insight about this? I hate just throwing money at this project car until the problem disappears.
So I've ordered a $388 clutch kit.

Former owner told me last year, when another engine installed, the flywheel was resurfaced but did not know if they put new disk and pressure plate in. The shop he had it in kept the car six months, $7500 bill and was still unusable.