I am currently tinkering with my uncle's 1990 740 GL w/automatic. He brought it to me to repair the overdrive. when he first got it about 2 monts ago (183,000 miles on it), the overdrive would engage after driving it for about 15 minutes. Although this is the first Volvo I have attempted to repair, I knew
about the relay problem. It had 12 volts at the connector for the solenoid, but the solenoid did not work. I replaced the solenoid with a new unit, but now the o/d will not engage at all. I still have power and the solenoid is now clicking while operating the button. I replaced both O rings on the solenoid, when the solenoid itself was replaced. The fluid has been changed recently and appears to be very clean. Is it a valve body problem or something else. Thanks for any insight.

My research has indicated that if gears 1-3 and reverse are working, the transmission is internally solid. There could be an exception, but it's unlikely. The o/d itself could be worn; this happens more often on manual trans cars when drivers fail to depress the clutch while disengaging the o/d and it wears prematurely. I would try a full flush, one in which the filter is actually removed from the transmission; "changing" the fluid only replaces about 1/3 of the fluid itself and leaves most of the dirt and sludge behind.

Overdrive on these AW series automatics isn't an add-on unit like the M46 overdrive... it's internal, just a 4th gear. It's simply switched on by an electric solenoid, not engaged by simply the position of a mechanically operated hydraulic valve, as all the other gears are. The solenoid just opens up an additional flow path to allow it to activate that clutch once the conditions in the trans allow it (typically, high enough road speed- it needs to be going 35-40 mph for it to engage).
In this case, it could be more serious than just a solenoid (which is what I would have suggested it needs). A fluid flush will help if the fluid is dirty, burnt, or old. The best method is described in the 700/900 FAQ:
take off the top trans cooler steel line at the radiator, and attach a hose to the radiator fitting. Allow that to drain into a bucket or gallon jug- refill the trans through the dipstick tube as you go. After 6-10 quarts, you should get clean fluid through the system. This flushes out the fluid in the torque converter, which you won't get even if you drop the pan. The "filter" in the pan is just a screen- it does not need to be changed. Ever. But clean fluid is a must.
--
Rob Bareiss, New London CT ::: '87 244DL/M47- 221K, 88 744GLE- 202K, 91 244 181K, 88 244GL 145K

Thanks, that is some good info. It seems a reasonably seasoned DIYer could do that flush, but the Haynes manual makes it sound like if there's any suspicion of trouble with an AT, drop everything and call a mechanic.