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Loud grind when try to shift 900 1992

Just recently purchased 92 940. I found a problem whereby the ignition key would not come back all the way to the proper position, but the car would be running fine (starter disengaged). However a lot of the trouble lights stay on and if you try to shift into reverse, get a loud grind like the starter engaging would make. Once you stop trying to change the shift position it stops so I'm guessing it is transmission noise. Once the key moved to correct position, then ok. The key was duplicate and not working real smooth, so I replaced it and thought all is well. It happened again though and given the disturbing nature of the noise, I want to make sure I put it to rest. I'm guessing maybe new ignition switch, but wanted some opinions. I also note that the shift position indicator on console (white marker) doesn't move, but don't see how that is related.
Any thoughts?
john s






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