Small Engine Troubleshooting Problems? Ask a Mechanic Now.
Manuals are practically impossible to come up with on these units after the three changes in ownership. But from what you describe (assuming I'm thinking of the correct unit), I would check the rubber drive disk to make sure it's traveling freely back and forth on the driven disk when you shift. It's position on the disk it run against controls forward and reverse speeds.
Please let me know and keep me posted. I'll help however I can.