The OD (OverDrive) light should be OFF for when overdrive is NOT engaged (button on the side of the gear lever below the large "unlock shift" button). If that small button has no effect on the OD light, there's something wrong in the gearbox.
Torque converters slipping badly could be bad turbine blades. They can deform over time, particularly if the gearbox gets a little too hot (heavy towing, particularly if you push the car hard up hills).
My advice would be to take it to an automatic gearbox specialist. Not a small company either, take it to a larger operation. I took mine to a small outfit in Maitland NSW and they trashed my gearbox for me.
Be prepared for a reasonable bill for repairs. It might be cheaper to get one from a wreck (which is what I ended up doing).
