Does it go up to third? If it still hits first and third then you may be looking at a blown gear. The shift fork for second is also for first so your fork may be good. It could of also blown the shift dog for engaging second. If it dumped the primary oil then he ran the trans with no oil either since it gets oil from the primary through a feed hole below the clutch. Sounds like you are going to have to crack the case and look at the trans. It's not to bad. I put it all three shift forks, shift shafts, and a new shift cam and with a full engine gasket set was about 300 doing it myself. If you get into gears may be a little higher but I have seen full trans sets for 200 or sometimes less on ebay so if shouldn't be to bad. Just know that the 04 will be different then 06+ I believe because they switched from straight gears to angled. If you get the whole assembly you may be able to switch to the newer style but I'm not entirely sure on that so don't quote me.