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850 intermittent tranny issue 850 1997

I'm only basing my thought on recent problems that I had with my '01 S40.

The up arrow did not illuminate on mine either and I had very similar symptoms to yours. Mine would shift hard into reverse and would be in 3rd all the time.
Instead of rehashing the whole problem, here's a link to my thread. Maybe it'll give you some insights.

https://www.brickboard.com/AWD/volvo/1614896/S40-V40/hard_shift_reverse_feels_stuck_3rd.html

My issue turned out to be two wires that were disconnected within the TCM (transmission control module) harness. Thus a communication error. The main computer and transmission computer were not talking to each other so the transmission went into limp mode. It was not an easy diagnosis.






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