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Have a very similar problem. A year ago the tranny started to act up, it would stuck at lowest gear when car is cold, transmission arrow light flashing intermittenly, Check Engine light on. When the transmission light was flashing the car can barely moved very slowly, however this can be clear up by turning off the engine (leave the key in ignition position) and move the shift level about twenty times up and down(later found out this is to reset the copper contact inside the PNP switch.) Took it to a Volvo dealer, misdiagnosed as "possible new tranny needed", resetted all lights and tried a thorough fluid change, did not solve problem. Eventually discovered this site and the bay13 site and replaced the PNP switch six months ago, and everything is fine now. Furtunately the car was a 95 model with the onboard diagnostic tool so I can reset the Check Engine light myself. Sounds like you have a similar situation but at a very early stage of a bad PNP switch. My guess is replacing PNP will solve all the problem. If your car do not have on board diagnostic then the Check Engine will need to reset by someone who has the scan tools.The PNP was not hard to change but had to take out alot of stuff to get to it, about 3 to 4 hour job. Good Luck
Rick 1995 850 T 82K Miles
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