You have two issues, one hydraulic and one mechanical. The low side of the TA is mechanical. With the exception of a few "Spragless" TAs made by Hy-Capacity in the late '70s - early 80s, any TA that slips on the low side has an over running clutch failure. On the hydraulic style like you have the hydraulics can offer some assistance to the low side clutch but when the sprag fails they will slip.
Other than sharing a common sump and filter, your 756 has two separate hydraulic systems. The rear pump provides oil for the hitch and auxiliary valves. The front pump provides oil for the controls and lubing the transmission and differential.
The symptoms you describe indicate a loss of flow from the front pump. I do not think that air entering the system is causing the problems. If it were you should have noise and a few other issues. The loss of flow could be a result of a worn out pump but other causes may be a blown O-ring between the MCV assembly and center section or a problem with the flow divider valve. Your tractor calls for a pump rated at 9 GPM at rated engine speed. The flow divider splits off 3 GPM for the steering and other controls and finally TA lube. The indicator light is monitoring the TA lube pressure. When it is on it indicates that there is not enough flow to maintain minimum pressure. The other six GPM goes to the oil cooler and then returns to lube the range transmission and differential. The 3 GPM for the steering and controls is priority so the flow is designed to remain constant. The flow through the oil cooler will vary with engine speed. If the problem were to be found in the TA or brake controls you would not have any steering problems.
I would pull the MCV and check for blown gaskets and O-rings and then check the flow divider and orifice. If that all looks OK it is time for a new pump.
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