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Luke --
"...when trying to shift smoothly...the car shudders a lot..."
Several things can cause this.....
- Oil on the clutch disc, clutch disc glazed 'n burned
- Bad motor/tranny mounts
- Bad pilot bearing
"...sounds like you dropped a cat into a food processor..."
Worn teeth on the ring gear and starter drive gear can cause this. You might remedy it with a new drive gear (only), but most likely the worn ring gear teeth will continue to skip.
If you examine the ring gear, you'll see the two worn spots, about six teeth long, and opposite each other on the gear. The engine ALWAYS stops in one of two spots* -- and the teeth in these spots take a beating.
(* With cyls 1&4 down or with 2&3 down.)
You can rotate the flywheel on the crankshaft by two bolt holes (90 degrees) on the earlier cars -- I'm not positive about an '86, but I think it would work.
You can remove the ring gear from the flywheel, rotate it 1/4 turn relative to the flywheel, and reinstall it on the flywheel.
You can remove the ring gear, flip it over, and reinstall it.
You can buy a new ring gear from Mother Volvo ($$$$$$) or find a good used flywheel ($$).
If you get in there for any reason, be sure to install a new rear main seal.
"...about one muffler a year due to it rusting out...when the car is running, water is sputtering out the tailpipe..."
This is true every time the engine starts and the exhaust system is cold. Ask the PO how long his typical commute was -- he'll probably tell you it was 5 miles, or so. The muffler never warmed up so water condensed in it.
Use a genuine Volvo muffler -- it'll have a lifetime warrenty.
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