I would search out in your area a free legal aid firm and get some advice.

New trans is in. Shifts fine. Smoother then the old one for sure. I ended up paying out of pocket but not the entire amount. Not happy but what can I do. At least I did not have to pay the entire amount. Now I am afraid to turn up the power. I cant believe a 4R100 is so weak that it fails on a stock truck at 30k miles.

How do you know that the truck was stock before you bought it?
The previous owner could have modded it, then de-modded it & sold it as the trans was going out.

My Lightning has 97,000 miles on it, runs 12.6's & the only thing I've done to the transmission is add a shift kit.

I agree with Clonetek 100 percent, There are many out there that mod and de-mod the 5.4's. It is a very common practice.

Sorry to hear of your troubles. I have recently experienced a similar type of situation with my wife's GM van. Trans was acting funny, so we took it in, dealership said new tranny was needed. They told me the cost of the repair, and I too about fell out of my chair it was so high.
I told them do not do anything, asked how much I owed, and went and picked up the van.
I wrote GM an e-mail explaining that although over the 36k warranty, the reccomended service interval was far from being reached, so therefore why should I be responsible for the trans. We went through several phone calls, and at the end, with a different dealer, it was fixed at a very reasonable cost to me. I did have to pay some, but not alot.
My 2 cents, get Ford involved, and maybe find a new dealership for repairs. It is worth the time and effort to contact Ford.

BTW, very cool ride, I have been thinking of one for a daily driver. My f-250 is great but the x-cab it getting a tad cramped with two kids, car seats and stuff the have to bring with them... Within the next year (after the van is paid off) I will start my search, looking at an Expy 4X or HD f-150, leaning to the HD, but the Expy has advantages to me as well. In all likelyhood, I would love the HD - a family man's hot rod with style and funtion (i.e. room), however the Expy has good looks, 4X4, dual zone a/c , heat and with 3rd row seating, it is easy to pack everyone in and comfortable too. Time will tell..
Good luck with your HD, and give Ford a shout, I bet you will be suprised.

i hate going to dealers. i had to get some brake work done to my truck cause my rotors were grinding and i took it in to the dealer. they said it was gonna cost like 1800 bucks, new rotors, calipers, pads, the works! luckily i have a cousin that works at another dealer and did everything for 500 bucks and i didnt need everything the first dealer said i did. i havnt been to a dealer since

Sooooo, I know this is an old tread, lol....

I just bought a 2003 Ford F150 HD with SuperCharger.
I put the OBDII Scanner on it and found the P0500

Issues: Cruise Control would stop working, shifts a little funky at times.
The rear gear was replaced to a 4.10, Not sure if this is whats causing the issue or if its a faulty

"Vehicle Speed Sensor Malfunction"
Did an Autozone sensor search and it looks like a $20 sensor thats mounted into the rear axle.
Looks like it sends signals to the Cruise Control, transmission and speedometer.... Since it has a different gear than stock, I assume the program on the ECU needs to be updated to reflect the new gear?
Maybe the sensor is good, but the computer is looking for the old gear, type of thing?

Has anyone replaced this or dealt with this before?

It doesn't care what kind of gear in in there. The only thing that will be off is your speedometer (either too fast or slow). That will not cause a CEL.

It sounds like the sensor or the wiring to the sensor.

Recommend that you check both the sensor and the wiring.

Update: Fixed it....

I replaced the speed sensor located on the rear axle, bought it Advance Auto...
Slide under the truck, think I used a 3/8" wrench, busted loose (1) bolt,
Unhooked the harness
Used a small screw drive to help pry the sensor loose, it has an o ring so you will need to pull up realizing that's whats holding you back.

Dropped the new sensor in, tightened the screw, hooked up the harness.
Truck shifts SMOOTH now,,, more power etc.
Cruise control works every time now....