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I think you guys are on the right track, and Lucid and Art seem to have this down pretty good. I ran into an identical problem on an '87 240 Wagon back in June. The car started just fine, but no matter what I did, the ECU told the IAC Valve to go to full-open position. -and thus caused an idle surge to about 2500 RPMs as soon as the vehicle was started. I swapped the original 544 ECU with a spare 544 and a 511, but neither of them fixed the problem. I also seem to remember that the IAC and TPS were properly connected (not backwards), but the wiring harness was original and showing signs of rot.
Unfortunately, I didn't track the problem down. The car had been in an accident with a deer (most of the bodywork was already repaired), but the engine was knocking pretty hard from some unknown internal damage (possibly oil starvation). I ended up doing an engine swap, installed an OEM Volvo replacement harness (non-biodegradeable), and the problem went away. While I don't have a cut&dry solution to your problem, I'd would suspect that it's probably one of the 3 items:
1. Bad or damaged ECU. (it was ok in my case, but yours could be damaged)
2. Failing temp sensor. (somewhat unlikely for your specific symptoms)
3. Shorted wires in the original wiring harness. (possibly one of the IAC or TPS lines is getting shorted to a +12 or a ground wire inside the harness bundle when the engine is running)
4. Improperly adjusted throttle body that's allowing too much air past in the closed position. Either the Idle Bypass Screw (black thumbwheel) is not in correct position, or the butterfly valve is open a tiny bit.
5. Damaged IAC Valve (unlikely, but possible), I've had it happen on two vehicles.
I think you've pretty well worked your way through most of the potential issues. You're closing in on the culprit and I'm very interested to hear what the final problem is once you find it.
God bless,
Fitz Fitzgerald.
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'87 Blue 240 Wagon, 247k miles.
'88 Black 780, PRV-6, 145k miles.
FYI, the 511, 544, and 554 were the 3 ECUs that were used on the LH-Jetronic Vehicles from 1985-1988. All of them should be compatible/swappable, except for the possibility of an issue when using a 554 in a manual-trans vehicle (I need to do some more research on this one particular combination). The 554 unit was the final version and solves some of the minor lean-idle warmup mixture issues that were present on some of the 511 and 544 ECUs. However, a properly tuned vehicle using a 511 or a 544 will not have any noticable problems under most circumstances. See if you can borrow or pickup a 511 or 544 for about $10 somewhere. I can loan you one if you can't find one at a local salvage yard.
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