When my car fails to shift to 3rd it has always been human error. I thought I set the shift to 'D' but set it to '2' instead. The moving plastic pieces around the base of the shifter that show what gear you have selected are often broken on a 90's Corolla. The owner of such a car can't tell what position is picked until he becomes very familiar with it. If the stick is set to '2', it will not shift into 3rd by itself. Make sure that the setting that you think is Drive is actually Drive and not 2nd gear. The various plastic pieces of the position indicator can be ordered from the dealer. For such insubstantial parts they outrageously expensive but in absolute terms the total cost of about $30 to $40 isn't too bad. If the cause is not that simple then the problem is most likely the transmission itself, but it would worth checking the mechanism around the shift lever. I can't visualize how a misadjusted cable or the pencils and other junk that drops down into this area would jam the mechanism so it would shift to 2nd but not 3rd. However the question stipulates that the problem is not in the transmission so the automatic shift assembly is about the only thing left to check. The main question is whether the cables are properly attached and extend correctly when you put the lever on 'D'. The raised plastic panels between the drivers seat and the passenger seat are in three sections. To get to the shift mechanism, first remove the rearmost panel that is around the parking brake. It is held by screws near the floor of the car. Slip it off over the parking brake. Next remove the handle of the shifter by removing the screw on the side of the handle. Then remove the middle plastic section , also by removing screws near the floor of the car. The middle section can be slid away from the front section, which need not be removed. Under the bottom of the stick near the floor of this assembly you will see a beige plastic assembly that pivots. The end of this that faces the front of the car should be unhooked and lose. This plastic piece is used during the process of attaching the shift cable and parking break cable to the shift stick. You put the shifter in Park and press the end of this plastic up to hook over a pin on the metal part that faces it. Then you attach the ends of the cables to the shifter and put in the clips or collars at the front of assembly that hold the cable sheaths. Then you detach the end of the beige plastic assembly. There is an electrical part at the rear of the shifter than the service manual calls a computer. On 90-92 models of this car it contains the logic that keeps you from shifting out of park unless you do normal things like depress the brake petal. If you find that you are having to press the release button (on the front left of this assembly) to release the stick then it is remotely possible this computer has gone bad. But there is a more dangerous possibility. Check your brake lights! If the fuse to the break lights burns out then it causes this minor symptom of having to use the release button. When you replace fuses, look up the proper size (AMPS) that is required. Don't trust that the old fuse was the correct size. ====headline==== Toyotas have a transmission control relay, usually just below the dash near the fusebox, blinker, etc. Find it, it's labelled, and get it tested- it's a common problem causing what you describe.