1996 Mazda Miata Engine Light - Possibly Electrical or Tran

I recently took our Miata to the shop to be checked. For the last year the engine light has been coming on and off - since this car is driven less then 1500 miles a year, we decided to hold off on finding out what is wrong with it. Well according to the service center they had to drive it get a code from the light, which goes off when the car is turned off - the code they are getting is 705 (past histories code from what they said- only code they could get from the car) They said it sends them to check the Sensor Selector. They said they see the wiring harnass is apart and looks as if someone has been in there before. They suggested we replace the Sensor Selector but said this is a $300 guess, they are not sure this will solve the problem. They said when they drove the car it starts out in 2nd gear, then it goes to 3rd gear, this is when a HOLD light flashes and the Engine light comes on (typically I noticed this at about 60 mph). They also said it could be a computer problem- where it is not communicating with the transmission. We're not sure how to proceed and what else to have checked - or if we should just go ahead and replace the Sensor Selector for $300 and that may not even be the problem. Thanks for any help!