1996 GMC Sierra Transmission-intermittent problem

I bought pickup in 2005. It is a 1996 GMC 1/2 ton 4X4 with vortec 5000 V8 SFI engine. 4 speed automatic transmission with overdrive. Insta-trac 4x4 transfer case, electronic shift transfer case.

The transmission will shift hard (slipping) in first and second gear at times. The service engine light will come on while this is happening. Other times I drive it and it drives fine and the service light stays off.

The truck in 2004, 161,558 miles (prior to my ownership) had some transmission work performed. Installation of a remanufactured dynamic torque converter, overhaul kit and reaction planatary gear set.

I have had no problems with it until now, with a little over 200,000 miles. I had a transmission company look at it and he found nothing wrong with the transmission. I was told by them that the truck needs a new ignition switch, key and tumbler.

The transmissin company said that the old ignition assembly over the years can become fouled with filings from the key reducing the voltage that certain components need to properly function. He said he knows this sounds odd but it does happen.

The vehicle is not driven regularly, sometimes sitting for a couple weeks between uses and does seem to run better when it is used frequently, which to me, seems to support the fully charged battery, etc. Theory. I hate to spend the money if this isn't correct. Has anyone else ever heard of this or have another suggetsion?