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I have been having the same problem with my '96. It's most likely the PNP switch that is causing the problem. You can be 95% sure that the check engine light is from the PNP problem and not from anything else, since you say the car runs fine. I have been driving around with my light on for quite a while. I have a home build scan tool but that only reads engine codes and mine is clear. The PNP switch sets a code in the transmission controller and can't be read by normal scan tools. You need the Volvo tool for this.
You can also go to Autozone and have them read the codes for free. They will tell you if you have any engined codes set that may need attention. Otherwise just live with it like the rest of us do, or get the switch replaced. (It's too damn cold here in CT right now to change it so I'm living with the CE light on :)
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