The release rod attaches to a lever. Make sure that lever isn't bent and that it moves freely. The bypass allows you to manually move the tractor when the engine is not running. If you can push the tractor, the lever that rod attaches to is jammed in the release position or there's internal damage to the bypass valve. If that's the case, I'm afraid you're SOL. There are no internal parts sold for the transaxle. It has to be replaced in whole. Which appears to be in the $600 range. :thumbdown:
Update: There are parts for that T/A. Looking at the parts breakdown, there is an internal lever and valve (#47 & 48) that are actuated by the lever on the outside. Bottoming out may have bent the internal lever or the outside lever has moved on the shaft. I still think the problem is in the release mechanicals.