Make sure your solenoid expander board has a 555 bulb in the socket near it.

There's a small square circuit board under the playfeld that has a bulb socket next to it. That's the solenoid expander board, there needs to be a bulb in that socket for the relay to switch reliably. The way it works is it switches the voltage from one set of coils to a different set, which is why your #1 drop is falling instead of the ball ejecting - the solenoid expander board isn't switching properly. Often people either remove the bulb or change it to an led, it needs the full current draw of a 555.

http://www.pinwiki.com/wiki/index.php?title=Bally/Stern#Solenoid_Expander_Board_.28AS-2518-66.29

Weird, if the LED was totally wrong for that, I'da thunk you'd have had other non-functioning expander board type problems with other coils. If you put that LED back in, does everything still work? Are there some LEDs that will borderline 'work' in this board?

It's there for the MOC3011 chip, it needs a certain amount of current to switch over. Any LED that's inefficient would probably work, or an array of many LEDs. All depends on the current draw, and the individual components. Some will be more or less sensitive.

Newer designs of the solenoid expander board don't need the lamp at all.

Happens all the time. Previous owners convert the game to LEDs and change 'em all not realizing the purpose of the load lamp for the solenoid expander and the similar GI flasher.