Your right it is a malfunction in the shift between 1-2nd, probably the clutch packs started slipping or..... ????? I would refrain from this or your trans may not like you much longer. You have the shift kit, but I would prefer a complete VB. If it does go call BTS and you won't have to worry about these types of codes again. As long as it is still shifting fine now I wouldn't sweat it.
Kevin