1990 VOLVO 240 STATION WAGON, I REPLACE THE TAILSHAFT SEAL ON THE TRANS. AND NOTICED A LOT OF LOST MOTION WHERE THE DRIVESHAFT FLANGE GOES INTO THE REAR OF THE TRANSMISSION. IS THERE A BRONZE BUSHING THAT COULD BE WORN OR A ROLLER BEARING?

As the others prescribe the bushing needs replacement - that said sometimes a groove has worn in the tailshaft as well, so even replacing the bushing is of no help....just make sure the tailshaft bearing and seal surfaces are smooth.
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http://www.fidalgo.net/~brook4/oilslubesfilters.html

You have two ways to replace the bushing. One way is to use the special tool which is a set of long splines that reach in the tailshaft housing and snag the bearing to draw it out.

Other way is to unbolt the housing itself and take tings to a workbench.

Either way, you are faced with the question of how to press in the new bushing. I believe the special tool comes with a second part to press the bushing. Another way is to use a socket of plastic pipe of exact diameter t=and tap things home.

I have done it both ways. It's simple and cost effective for me to remove the housing and just take the bushing R&R to a local maching shop.

If you remove the housing, note which bolts go where because some are longer and need to go back where they came out.
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'Most Improved Patroller of the Year' Blue Mountain Ski Patrol, Palmerton, PA

Happened to me, PO replaced seal only.. still leaked.
Must replace bushing!
Karl 86 245

See the FAQ for 700/900 cars under "Atuomatic Tranmission" and you will find complete instructions. Replacing the seal and not the bushing is a prescription for frustration: it's the bushing wear that ruins the seal.