Our truck had a Meritor transmission that would go into SM most times it rained, and sometimes when it was cold. The truck and transmission worked fine in that SM state. We could manually shift through the gears, but the automatic transmission function went away. When these failures occurred, a few miles of dry-road running or a fully-warmed truck would bring back auto-shifting and the SM code on the dash would disappear on its own.
To us, this was a minor irritation; not something to go out of service for to get fixed. The diagnosis would be difficult and time consuming, since the problem was intermittent. Had we set course to a dealer when the SM code appeared, the code would likely disappear before we arrived. In the years we owned the truck, it never happened that we drove to the shop for other reasons and the SM code was then active.
Writing down the codes and conditions for later reference did not help. The technicians we talked to about it wanted to catch the malfunction in the act. The codes they pulled were interesting to them, but without a smoking gun, they were reluctant to attempt a fix. Some repair attempts were made like replacing an ABS sensor that the codes reported and replacing a harness (warranty repair). Those attempts did not resolve the issue.
When we sold the truck, the issue was disclosed to the buyer and he did something we were never willing to do. He took the gamble and threw parts at the problem. He had all ABS sensors and a couple of other sensors replaced. According to a report from him later received and happily made, that solved the problem. With over 750,000 miles then on the truck, the transmission worked perfectly, warm or cold, rain or shine.
In this case, it was not a transmission issue per se. The Meritor transmission was not a piece of junk (as one member stated above), one or more sensors were junk. The fact that issue was resolved when a number of sensors were replaced, but not resolved when one code-indicated ABS sensor was replaced leads me to believe that two or more sensors were defective in some way at the same time.
In such a situation, all sorts of weird signals and/or codes might be generated that could be meaningless or misleading. In such a case, a skilled technician could put hours into diligently following every diagnostic procedure in the book and still not uncover the real issue. The truck buyer's willingness to shoot from the hip and gamble on the result proved to be the wise course.