I have a 1995 850 GLT with 106,000 miles and it apparently needs a rebuilt transmission. The "up" arrow flashes continuously and the "Check Engine" light remain on. I have taken in the car for the same problem at 33k, 67k, 69k, 89k, 103k, and now at 106k. The first time the problem occurred the dealer changed the PNP switch, other times the code was cleared and I don't know what the Volvo dealer actually did. When I took the car in at 103k, the dealer simply changed the oil (eventhough the oil was changed with synthetic oil prior to taking in the car), changed the spark plugs (even though the spark plugs were changed when the car went in for a major maintenance at 90k), and cleared the code plus charged me a bundle. At 106k, the lights went on again so I took the car to an independent Volvo mechanic and they were not able to fix the repair and stated:

"No engine codes logged, found 122 code logged in transmission system, break in solenoid S1 circuit, cleared code and road tested, during road test, car would not shift and 122 code reappeared, problem is internal in transmission, recommend taking car to Volvo dealer for repair, entire transmission may have to be replaced".

When I asked the Volvo dealer for an estimate, they told me it would cost about $3,800 for a rebuilt transmission. Since the problem initially occurred while the car was still in warranty, I am questioning how big of a problem this really is. Most of the 106,000 miles are highway miles and once on the highway, the car runs nice. But now the problem lights remain on and the transmission slips when the car comes to a stop after operating it for 15 minutes.

Any suggestions?