I use synthetic 5W-40, many people in the forums sing it's praise because they get quicker starts in winter time. If you're changing your oil like FoMoCo says you should, the regular oil should be fine, unless it gets much below freezing a lot where you are.
Steer clear of Fram filters. You can get OEM Motorcraft filters from Wal-Mart for a good price, they are good filters, but not great filters. Some of the highest quality filters you'll find are the Purolator PureOne, and the Mobil 1 filter. Presently they're both just under $20 at Advance Auto.
Other people have found they can use larger filters designed for Caterpillar engines on a 7.3. I have a Donaldson ELF7405 that I'll use on the next oil change. I had two delivered to my front door for about $27 each. It's 98.7% efficient at 15 microns, and 50% efficient at 7 microns, and holds at least 1 more quart over a standard 7.3 filters. That's exceptional for a full-flow lube filter. Other people speak about using Fleetguard models and such, but I don't recall all the data.
I'd service that transmission pronto. But beware of what some shady people market as a "flush." Not all flushes are the same.
