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hello, thanks for posting
This code is kind of common on the Corollas between years 2005-2008, it means the torque converter lock up solenoid is not functioning correctly, there is a Toyota service bulletin which recommends replacing the solenoid plus the computer and the transmission. In most cases I have come across the problem can be caused by very dirty /contaminated transmission fluid, a faulty speed sensor or a computer issue. The first thing you should do is to have the transmission fluid completely flushed using a fluid exchange machine, most of the time the solenoid sticks due to small metal particles in the fluid or friction material. If it shifts normally it may be all that needs to be done so I would recommend doing that first then see what happens. If you'd like to view a copy of the bulleting type this into your search bar: TSB number TC008-04, there should be a copy for you to look at.
Thanks , I can understand that, Have you tried an additive like Lucas transmission treatment? I have also seen a few speed sensors or damaged speed sensor wiring cause this code, after clearing the code by disconnecting the negative battery terminal how long does it take for it to turn back on? It's not failing the test because of the transmission code, the emission control monitor does not run for any part of the transmission, it fails simply because the check engine light is on, when doing the visual inspection, what you can try is turn the light off by disconnecting the negative battery cable, then drive it for about 50 miles or so in order for the emission control monitors to run and pass, the transmission failure code may tak longer to set then go have it smogged but if it turns back on as soon or right after driving it then that won't work.
Ok, sounds like he knows what he's doing, the idea is to get the emission monitors to run and pass then have it smogged before the transmission sets the light again, best of luck with this.