I have a house built in the 60s with a 1.5" pipe coming out of the floor about a foot and for some reason the previous own has a 1" reducer on the end. It was sweated (believe that's the term) on there so its not moving. I have a new front loading washer with the 3/4" hose and need to hook this up. I know the new ones dump out fast with a lot of volume and I need the stand pipe to be at about 36". I need a closed system to make this work. The trap is in the floor, I poured water in the pipe and it will fill up and doesn't seem to get past the trap, I placed my hands around it and gave it some compressed air and it started to drain. It went down, then some came back but not a much, then went down again, came back with a little less and so on and so on until its gone.

So #1 do I need to have the pipe snaked?
#2 how do I create this closed drain system?

Yes, snake line. You are going to need a clear line.

Remove reducer. Cut off or unsolder.

Attach PVC pipe with sanitary tee and AAV using sheilded rubber coupling.