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I'm reposting this from yesterday just in case it helps:
On my 81 the OD would only engage some of the time. The wires in the gearshift were broken but would touch once in a while. Other parts of the system include the button on the shifter, the relay to the left of the glovebox, the fourth gear switch on the transmission which makes sure the OD only engages in fourth, the solenoid on the driver's side of the transmission, the wires connecting everything, and the actual OD unit on the back of the transmission.
You can check the OD button and the wires in the shifter at the relay if you know exactly which pins to check. Or you can check the same thing under the front passenger carpet. There is a connector under there where the wires from the shifter button plug into the system. You should have on-again off-again continuity from one wire to the other at the plug each time you press the shifter button. If you don't get a consistent change each time you press the button, the problem is probably/partially the button or the wires from the button to the plug where you are testing. This is how I understand it.
On page 430-4 in Bentley is a diagram of trhe M46 OD wiring and layout. OD problems are really common on these cars, but seem to be pretty cheap to fix most of the time. The archives have lots of info, and the place the other poster suggested would be well worth looking at. The Bentley is worth the money and pays for itself very quickly.
Someone more knowledgeable will help you with further checks of the sytem. The check I described is pretty easy if you have a multi-meter or some other way to test for continuity. Also, the relay is often the culprit. If the relay turns out to be your problem, you can resolder it or find one at a junkyard for $1 - $8. Good luck.
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Thanks to everyone for the help, Doug C. 81 242 Brick Off Blocks, stock, M46; 86 244, 140k , auto.
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