A tranny with low ATF levels might get hot and that could cause the tranny to stay in 3rd. That is part of the programming, the higher engine rpms push more fluid through the radiator and help in cooling.

The torque converter could be replaced, but I suggest not to do it. The labor is at least 8 hours ($$$) and you will not have solved any problems. Instead, monitor the ATF level and look for leaks.

I find that checking the level with the engine 'cold' is easiest. Start engine, go through the gears, R-L, stopping at each notch for a few seconds, put the car in P and check the level with the engine at idle.
Hydraulic fluid expands with heat and there are times when the 'hot' tranny fluid will show slightly over the full mark.

I found it hard to believe that a Volvo shop didn't tell you the codes they found or didn't erase them.

The PS fluid is on the passenger side and has nothing to do with the tranny, separate problem.
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