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PNP or transmission? 850

My wife has a 1995 Volvo 850 Turbo wagon (we love it!), with an automatic transmission, and she's had the following symptoms:
1) reverse (back-up) lights don't come on
2) when first starting car for the day, it stays in first gear
3) sometimes goes into 3rd, with the up arrow flashing
4) car sometimes doesn't want to start (more of a rare symptom, but it's happened a few times)
5) check engine light came on
When it doesn't want to shift out of first, I shift it into neutral for a moment, and then back into drive, and then it is fine, 95% of the time. If that doesn't work, I do it again, and then it's OK.
Would these symptoms be indicative of a bad PNP switch/gear selector sensor, or a mechanical problem with the transmission? How can you tell the difference? If it is a transmission problem and not a PNP problem, why would the reverse lights suddenly not work?
Thanks!
I found a shop here in Houston that is going to replace the switch for $250, so I'm going to go ahead and do that.
(I'm keeping my fingers crossed that we don't need a new transmission...)






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