The guy at the parts store was right. Dexron II (that's the GM name for Mercon) is no longer made. Dexron III replaced it. If you can find Dexron II anymore, it's going to be a collector's item and NOT something you want to be putting in your car.
Mercon/Dexron III is the correct fluid. DO NOT use Mercon V or Type F (well, unless you're racing).
Given the AOD's reputation and Ford's lack of action fixing their inherent problems, here's your most likely scenario: the clutches and/or bands are most likely shot. The throttle valve (TV) cable grommet in the throttle body's lever arm is more than likely shot, too, and should be replaced with a new nylon or brass piece (available at most Ford dealerships). That little grommet has been the deathblow to most AODs because if it gets loose (and they do), you will lose TV line pressure and get the anemic shifting associated with it. Over time, this low TV pressure will cook the clutches and bands because they are simply slipping and generating heat instead of engaging and doing useful work.
On the other hand, mebbe you should just clean out the throttle body with brake parts cleaner when you drop the pan and change the filter. Could just be crudded up. That and check out the shift linkage, and the TV cable for proper adjustment. Good luck!
BTW, if you DO have to replace the trans, get a warranty IN WRITING.