I finally got the car put back together. I did the following:

* replaced rear main seal
* new synchros for 1st and 2nd gears
* minor OD rebuild
* lots o' gunk cleaning
* new 4th gear OD switch
* fabricated new wiring harness for OD

My plea for help was here:
http://www.brickboard.com/RWD/volvo/1460192/220/240/260/280/really_want_rebuild_m46_od_talk.html

It was an ordeal, although I have to say that the OD rebuild was the easy part. I have a spare OD that I may rebuild just for fun for the practice. So one thing that really screwed me up was the destroyed wiring harness. When I rebuilt it, I accidentally switched the +12v wire (yellow) to the solenoid with the ground wire (red) to the 4th gear OD switch on the top of the gearbox. I test drove it like this and apparently shorted out the new 4th gear switch I had just installed. After tracing the wiring faults and looking at the Bentley diagrams, I fixed it. Later, I thought it was the relay and switched it out with another that I thought was good. This was another wild goose chase since the replacement relay was actually toast.

This page from Duane H. was the most helpful in troubleshooting the electrical issues after I fixed the wiring harness (there are two troubleshooting posts):

http://www.brickboard.com/RWD/volvo/1377532/220/240/260/280/m46_overdrive_issues.html

This told me the relay I was using was bad and when I got a good one back in there, it told me that the 4th gear switch was dead. So to get the car going until I can get another switch, I implemented an inelegant solution. I built a cable to permanently ground the wire that would normally go to the 4th gear switch to the back of the OD, ala the solenoid ground (easy place to access). You just have to be careful as now the OD will work in every gear (you can have an 8-speed gearbox if you want). I will get another switch this week.

The one thing I hope to contribute is this -- you do NOT have to drop the trans crossmember and tilt the trans back to get to the 4th gear OD switch on the top of the case. Take a 22mm deep socket that has a hole in the side as the detent for the ball bearing in your socket driver. Use a punch that is sturdy enough to fit into this hole and work as a lever. Since the switch shouldn't be heavily torqued into the case, you should be able to loosen or tighten the switch enough with this jerry rig so that you can manipulate it the rest of the way with your fingers. After all the work I had put into the car, I really didn't want to unbolt anything else and since I didn't have a crow's foot for this and my driver and deep socket wouldn't fit in the space of the tunnel, this seemed like the best compromise.

Thanks to everyone (especially Duane) for their help. The clutch is smooth, it goes into 2nd gear easily, it's quiet, and the damn thing better be good for another 100k, when the engine hits 450k and we decide what adventure we'll embark on then. Cheers.