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TRansmission tailshaft bushing and seal are shot. Very common, happens to all AW series transmissions. Parts run about $40 (from Volvo), less aftermarket perhaps.
A Volvo shop should have the special puller tool that makes this job a snap. Otherwise a shop needs to remove and clean up the whole tailshaft housing, involving a new gasket as well.
Keep in mind that the drive flange (yoke) can be worn, and may need to be replaced in order to get a seal again. Keep filling it up in the meantime, don't run it low.
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Rob Bareiss, New London CT ::: '87 244DL/M47- 234K, '82 245T/M46-182K, '84 242DL/AW70-100K, '89 244DL/AW70- 212K and I miss my: 86 244DL 215K, 87 244DL 239K, 88 744GLE 233K, 88 244GL 147K, 91 244 183K
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