Combine that with the shifter working like it should by hand and you're looking at internal transmission issues.

Might be a silly question, but when it's in forward and you look at the shaft and the coupling at the back of the transmission they're not moving at all ?

Did you turn it with the prop shaft coupler/prop attached to the tranny, or did you pull the bolts out of the coupler and then turn the coupler on the tranny?  Just want to make sure / confirm the clunks, etc. are coming from the tranny (I assume so).

When it goes into reverse, is this in the water with a load on the prop?  Just wondering whether it is slipping in reverse or it's fully engaged.

Are there any noises when it's turning with the engine (as opposed to when you are turning it by hand)?  If so, same noises in forward and reverse?

If you have disconnected the prop coupler so the tranny would spin freely and you run the engine, with no load on it, does it turn at all in forward?

Unfortunately, all of these things point to internal issues...  :(   I'll post separately on my experience in replacing a 40a with an 80a in a '96 SN (should be the same hull as you).

Damper plate would only be a possible issue if it didn't turn in both forward and reverse.

I had slipping in reverse, followed by slipping in forward in my '96.  I pulled it and tore it part way apart.  There is a rotating bell housing with a ring gear that turned in the housing. Long story short, I learned that the gear was press fit and was not supposed to turn inside the housing so it was shot.  I didn't have all the tools to take it completely apart (presses, etc.), the parts (including new clutch plates since I had gone into it), was somewhere in the $600-700 (or more) range, and I had no idea whether I could get it back together again correctly (especially without presses).  It wasn't worth it to try, have no warranty, and possibly screw it up, so I opted for the 80A from SKIDIM.  A few things about the SKIDIM 80A.  It comes as a 'kit' with the tranny, a new damper plate, and a 12" tranny cooler and long hoses!!  The tranny housing in the back is higher than the 40A (looks like the housing is also used for V-trannies) and I was afraid it might not fit where I could get my floor board back down.  But it did fit fine (you have the same hull as my '96).  Even though the housing is aluminum, the sucker is heavy; you need two people to put it back in (my back is still feeling it years later).  I was so pleased with how it operated as well as that 12" cooler, when I got my '97 project boat, one of the first things I did (original tranny) was to put a new 12" cooler in (the 12" is around $200 if you buy it separately, so the kit is a little more reasonable since you get the cooler and the damper plate).  My damper plate had probably 1300hrs on it, but other than a little rust, was perfectly fine (although of course I replaced it with the included new plate).

Also on costs, it would have been 1200-1400 to have mine repaired/rebuilt by someone else, and a rebuilt with maybe a 30 day warranty just wasn't worth it.  I'm glad I did it.  Of course, I hope my tranny in the '97 holds up a long time (hence the 12" cooler and I now have an electric pump that empties the fluid in about a minute so I"m now changing the tranny fluid every 50 hours with the engine oil change--easier than the oil change).  If/when the current tranny goes, I'll most probably opt for a new 80A.