Art said your problem was in the cluster:

"Bout the only reason your VSS signal would go missing is someone messed around in the instruments. There's your culprit."

"VSS is indeed needed for idle control, and if a 311 was being set, it was lacking at the ECU. This problem could have followed the cluster, not because it was the wrong year, but because it was damaged. "

What he was trying to tell you, but which he obviously gave up trying to convey, is that in his expert understanding of the electrical signals in a 240 - a knowledge and experience that far exceeds any mechanic's - there is only one thing that could be causing that problem, and it is in the cluster. A little more digging (there are other posts about the VSS and speedometer problems on the board), or a few intelligent questions to Art about what happens to the VSS signal in the cluster would have shown you explicitly that the speedometer is part of it.

As far as I can tell, you did not try the very simple and cheap test of swapping in a good speedometer. I also feel now that you did not understand the problem well enough to relate to the mechanic that the speedometer is an important part of that system. They told you the VSS signal from the differential is fine, and because you lacked the knowledge, you accepted that and moved on.

NOW, after having replaced the speedometer, SURPRISE! IT'S A MIRACLE! Your problem is solved. Gee, I just can't imagine what finally made everything that wonderful mechanic of yours did 'fall into place,' but by God, it's fixed now! Must have been a magic leprechaun hiding in the glovebox, keeping all of the mechanic's necessary and unquestionable work from fixing the problem. I'll bet the new speedometer he installed was haunted by the vengeful spirit of the former owner, which scared off the leprechaun! Yep. It's a miracle.