I recently installed a powerglide transmission in my 65 chevy c10 along with new torque converter. The tranny had set for quite a while.
My question is why will it shift immediately while cold but once it warms up I have to race the engine before th tranny will engage? The hotter it gets the more I have to race the engine.

Did you adjust the bands with a torque wrench?

When automatic transmissions sit for a long time the lip seals get hard, as the drums heat up they expand allowing fluid to pass by the seals.

It is true that when a transmission sits for awhile the seals will harden up.

It is true that when a transmission sits the lip seals inside will harden up. When the fluid in the transmission is cold it is thicker and the seals will hold the thicker fluid but as the fluid gets hotter it thins out and in turn will just dump past the seals until enough pressure is built up to finially seat the seal against its housing. You might try to put in a additive to soften up the seals. This will take a couple weeks of driving to get them soft again.