1999 Mercury Cougar code

I would suggest having it checked by tranny shop
it should be ok to drive around for a little while

this is the steps needed to diagnose and locating the troubled area

TROUBLE SHOOTING in FORD CD4E (MAZDA LA4A-EL) OVERHAUL article for non-electronic symptom diagnostics.
TEST C: TORQUE CONVERTER CLUTCH (TCC) SOLENOID
1. Electronic Diagnostics
Ensure transaxle harness connector is in acceptable condition. Repair as necessary. Ensure transaxle harness connector is fully seated. Connect NGS tester or equivalent to DLC. Perform KOEO test until Continuous Memory Code(s) have been displayed. See QUICK TEST. Enter output test mode. See ADDITIONAL SYSTEM FUNCTIONS. Select ALL ON mode. Push START to turn outputs ON. Push STOP to outputs OFF. If vehicle enters output state, go to next step. If vehicle will not enter output state, see SCAN TOOL UNABLE TO COMMUNICATE.

2. Check Electrical Signal Operation
Disconnect transaxle harness connector. Inspect condition of connector and repair as needed. Using DVOM, connect positive lead to transaxle harness connector terminal No. 1 and negative lead to terminal No. 7. While monitoring DVOM, press START and STOP to cycle solenoid output on and off. If voltage changes at least.5 volt, go to step 5. If voltage is unaffected, go to next step.

3. Check Continuity Of Solenoid Signal & VPWR Harness Circuits

Ensure ignition is off. Disconnect PCM 104-pin connector, and inspect it for damaged pins, corrosion and loose wires. Repair as necessary. Install breakout box, leaving PCM disconnected. Measure and record resistance between breakout box test pin No. 54 and transaxle harness connector terminal No. 7. Measure and record resistance between test pins No. 71 and 97 and transaxle harness connector terminal No. 1. If any resistance is greater than 5 ohms, repair open circuit. Connect all components. Disconnect breakout box and repeat QUICK TEST. If each resistance is 5 ohms or less, go to next step.

4. Check Solenoid/Harness For Shorts To Power & Ground
Measure and record resistance between test pin No. 54 and test pins No. 71 and 97. Measure and record resistance between test pins No. 24, 51, 77, 91, and 103, and ground. If any resistance is less than 10 k/ohms, repair short circuit. Connect all components. Disconnect breakout box and repeat QUICK TEST. If each resistance is 10 k/ohms or more, go to next step.

5. Solenoid Functional Test

Connect transaxle tester. Perform TCC solenoid functional test. See tester instructions. If solenoid activates (Green LED on), go to next step. If solenoid does not activate LED, go to step 7.

6. Transaxle Drive Test

Connect PCM 104-pin connector. Perform tester drive test. See tester instructions. If engine RPM decreases when operated with tester,
7. Check Resistance Of Solenoid

Set tester Bench/Drive switch to BENCH position. Set Solenoid Selector switch to OHMS CHECK. Connect ohmmeter negative lead to TCC jack and positive lead to VPWR jack on tester. Measure resistance. Resistance should be 12.5-19 ohms. If resistance is within specification, go to next step. If resistance is not within specification, replace solenoid body assembly. Erase all trouble codes. See CLEARING CODES. Repeat QUICK TEST.

8. Check Solenoid/Harness For Short To Ground
Check continuity between BAT (-) tester jack and TCC jacks. If continuity exists, replace solenoid body assembly. Connect all components. Erase all trouble codes. See CLEARING CODES. Repeat QUICK TEST. If continuity does not exist, erase all trouble codes. See CLEARING CODES. Repeat QUICK TEST. See TROUBLE SHOOTING in FORD CD4E (MAZDA LA4A-EL) OVERHAUL article for non-electronic symptom diagnostics.

Good luck