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On my 87 745T w/LH 2.2, this connector is under the hood on the right (passenger) side just forward of the coolant reservoir. It is a dual connector, containing two female spade connectors with one connected to a green and white wire for checking idle mixure and the other connected to a red and white wire for setting idle speed.
Connecting the red and white terminal to ground will close the idle air controller (IAC) allowing you to set the idle speed to 725 RPM with the black plastic knob on the throttle body. The IAC is part of the Constant Idle Speed (CIS) system.
To set mixture, you need to obtain the special tool which you can make out of an LED and a 750 Ohm resistor and some wire. (You can also use a dwell meter.) To set idle mixture, you connect the tool to the green and white wire and the battery + terminal and adjust the mixture screw on the AMM until the LED is on 50% of the time and off 50% of the time. This tool can also be used to troubleshoot the EZK117 ignition system via another connector on the opposite side of the car.
Go to http://www.mvpvolvo.com/ and look for their "setting base idle" document to see the original source of this information, as well as a diagram for making the tool.
HTH
bagle
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