Pete,
I enjoy hearing your input.
First of all, the only thing I'm calling ATF is ATF. As Chris mentions, the owner's glovebox handbooks state Type F as the proper manual gearbox lubricant. I've checked the four different books in my posession, '79, '80, '84 and '89 and they all say the same. But I am aware that, "Volvo recommends synthetic transmission oil, Volvo Part No. 1 161 243-3 for use in areas where temperature remains above 14 degrees F (-10 degrees C), or for sustained heavy use such as in a taxi or other commercial vehicle." At least that's what Bentley tells me. I don't know if I should take that to mean that the Volvo recommended synthetic is supplied at the factory or if it's up to the owner to make the switch.
I'll tell the story of my recent M47 experience. Admittedly, it is limited to one transmission, that in my '89 wagon (I have previously worked on the M45/46 in other cars). I encountered many, if not all, of the problems you mention.
I can't say for sure what fluid was in the gearbox but it was discolored, verging on brown. I replaced it with Redline MTL, as I mentioned in my above post. Perhaps, if my transmission was originally supplied with the official Volvo fluid, a previous owner took it upon himself to replace it with Type F or Type G. But judging from the number of genuine Volvo parts that I have found on the car, and I'm talking normal wear items here, I surmise that this car was regularly serviced by a Volvo dealer or by a conscientious owner who wouldn't buy aftermarket. Spark plugs, plug wires, V-belts, timing belt, oil filter all had the Volvo name on them. It would stand to reason that if the fluid was changed Volvo synthetic fluid would be used to refill. But this is just conjecture on my part. All I know is, based on looks, the fluid was due for replacement.
Play in the shifter was a definite concern. My previous three 240's, one of which I'm still driving, had not exhibited the sloppiness that was present in the '89. The pin goes through the shifter was rusted solid (no play there). I had to cut on either side of the shifter just to be able to remove it which effectively ruined the nylon bushings. That was no big loss since they were worn, as you have suggested. I discovered that the shift lever I removed from my departed '79 242 was nearly identical to the one in the '89, the only real difference being the chrome plated outer piece was a bit longer on the older one. I used the inside piece, the pin and the bronze bushings from the '79 and everything else from the '89 to rebuild the shifter. No new parts. The rubber and the rolled pin were in good shape. The nylon socket pieces were still pretty good. The pins at the coupling immediately behind the gearbox were also good so I reused them. I lubricated the various points where such is needed. There is still a bit of play compared to my '80 but it is so much better than before.
Aside from that, the clutch splines were pretty dry, the pivot for the release bearing carrier was also dry and I used the grease that came with the new Sachs clutch kit for those points.
Needless to say, all of these repairs contributed to much smoother shifting. This car really needed all of these remedies. I can't be sure that fluid is FRANK's problem. But in my case I really believe that the Redline was the most important part of it. I say this because the main complaint before repairs was difficulty shifting from neutral into first gear and into reverse. No trouble shifting up or down through the other gears. According to the Grimshaw article I cited earlier the first/reverse problem is a symptom of fluid breakdown. And the old fluid did look awfully cruddy.
Maybe it's all in my head but that's my story and I'm sticking to it.

I'm now going out to the garage to lube the clutch cable in the 242 with some Tri-Flow, containing Teflon, per your suggestion in another thread. When I drive it after driving the much improved '89 it feels so stiff I almost get a leg cramp.
--
'80 DL 2 door, '89 DL Wagon

umm....in my owner's manual for my '86 it says to just use type F ATF...the same as used for older ford cars, couple bucks a quart and works great. it sounds to me like the bushings or whatever to me too