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This is a common problem. Called the shift-solenoid lockout
(or something similar like Shift Microswitch Lockout).
Note that there is a little button to the right of the
shifter that manually overrides it (so you won't be stuck
if it totally fails).
Ours 95 is on its third microsowitch (and the last one was
replaced some time ago and seems to be a keeper).
Go to this site
http://volvospeed.com/bay13.htm
and pick BAY 13 to see step-by-step fix it instructions for many
of the 850/70 series common problems. Look for "Shift Microswitch
Replacement" for your issue.
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