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Micke
I had the same code read out after I had changed the gear selector switch. The Volvo dealer told me that I needed to replace the transmission. This was going to cost me anything between $3000 and $5000 Australian dollars. And my 850 is about 9 years old and has only done 130,000 kms.
I went and got a second opinion. The same code came up. The problem was that the sensors in the transmission were picking up a different speed reading in the engine/driveshaft and so causing the transmission to go into trip mode. The sensors were operating in some pretty filthy transmission fluid which was causing them to not read the speeds properly. Apparently the differential can be as little as 70 rpm.
The solution was to flush out the transmission - 1500 kms later the problem has not occurred again. The cost to flush out the transmission was $300 Australian dollars.
I am going to wait a couple more weeks and write to Volvo Australia letteing the know what happened to me and how, had I listened to the Volvo dealer, I would have ended up spending alot of money.
Peter
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