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940 won't go into overdrive 900

I have a 1992 940 that will not go into overdrive.
Had it to my local volvo shop and he promised it was a "modulator" (200$ item) that sits on top of the tranny. Well after a week of trying he finally sent it over to a tranny shop. They spent a day on it and now they want to drop the tranny and possibly rebuild the overdive. Does this sound correct??? They estimated the cost to be 1600 to rebuild the overdrive. Again...does this sound correct??
Car has 165K on it and other than this problem it runs great. Just bought a new truck for the wife so I don't have many options other than biting the bullet.

Any advice would be greatly appreciated!

Thanks
Tom






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