1986 240 DL/overdrive relay/overdrive solenoid/transmission/

I'm a newbie here and have been checking this board for the past couple weeks checking out some problems that I have been having with my brick. This has been a priceless rescource. Thanks to all who support it. I thought I would post the issue and final diagnosis with everyone. Hope this helps somebody.

I was driving my 1986 240DL on the freeway doing about 75-80mph when all of a sudden it dropped into 3rd gear and the overdrive light came on. I pulled over, checked the transmission fluids which were low, so I filled them up, checked the fuse which was blown and replaced it. That fixed the overdrive light problem on the dash, but it still wouldn't go into overdrive. Previously I noticed the overdrive light coming on randomly. I am mostly a city driver so I could not notice that it wasn't going into overdrive.
I got it home, took it to a mechanic to told me to take it to AAMCO. I didn't think (prayed to god) it wasn't internal, so i put the blown fuse back in to see if the could diagnose that atleast. $90 later, they said it was internal AND didn't find the blown fuse, and were willing to charge me $700 to open it, and another $2100 to fix it. Right then I decided to take matters into my own hands. The lady I bought the car from a year ago for $1700 had service receipts dating back to when the car was purchased. A used transmission was installed 2 years earlier, so I convinced myself that couldn't be the problem.
After doing multiple searches on this board and speaking to my old mechanic back home in Sac, I managed to replace the relay which is located behind the ashtray, a white bosch relay which I purchased from RPR for about $37. I think the previous relay I had was fine though, I could hear it switching when I clicked the overdrive button on the shifter. I replaced it anyways and that didn't fix the problem, so I traced it to the solenoid, but first I tested the line from the relay to the solenoid and that was fine.
I had litte idea what an overdrive solenoid looked like. I followed the wire from the relay to the shift box, over the transmission, attached midway onto the transmission on the drivers side. It looks like an upside down "T" attached to the transmission above the pan.
First I drained the transmission fluid, and then re-filled and replaced the gasket just for preventive maintenence after I replaced the solenoid. The fluid did not look that bad at all. So then I pulled the solenoid and it was missing the inner O ring which had caused a 2mm beveled gap through the metal to the outer O ring. That couldn't be good, so I purchased a brand new overdrive solenoid for about $300 and replaced it. STILL DIDN'T FIX THE PROBLEM.
So by now i'm pretty pissed. I had done everything Å could, so I took it to Volvo Centrum in SF here. For $127 they tood a look at the problem to diagnose it. They checked everything I had done, and replaced the new overdrive solenoid with a new one to test, because sometimes even new ones are bad and it still wasn't the problem. They had determined that IT WAS INTERNAL. Dahhhhh!!!
Well, they told me there is a place back in Sac that installs used transmissions, I think the same place that put the last one in. I think I might check it out if it is under $1000, according to the receipt two years ago it cost $650 to replace. I have replaced the heating core and the master cylinder in the car already. SHOULD I GO FOR A NEW TRANNSMISSION OR DUMP IT? That is where I am at now. This is my second volvo, I had a 1980 240DL before. I had big plans for it too.
Well thanks to everyone again. I had a good time working on this problem anyways. Hope this helps somebody. Let me know if it does.

~Neight