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There is a small pin at the bottom of the shifter that fits into the NSS. The NSS is aslide switch - when the shifter pin moves, the slide mechanism in the switch moves. When the shifter is in the park or neutral position, the switch closes the circuit between the ignition key and the starter. Any other shifter position and circuit opens, preventing the starter from engaging when the car is in gear.
In a similar manner, when the shifter is in reverse, the pin slides the switch to a position that closes the circuit to the reverse lights.
As the car ages, both the shift linkage and the NSS get loose and sloppy. Sometimes, fixing one or the other will tighten things up enough to restore function. In your other post you mentioned replacing the linkage bushings.
It's not too difficult to test the switch with a test light. You can find wiring diagrams at www.volvowiringdiagrams.com The switch can be accessed by removing the center console.
You mentioned that your mechanic said something about a rod in the shifter. Sounds like he was referring to the pin I mentioned. If that was broken, the NSS part of the switch would not work at all, so that doesn't seem to be the case.
With all that said, I assume you'he checked the other usual suspects for non working lights, e.g., bulbs and fuses.
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