1.) The speedometer sensor is on the back of the differential. Quite visible once you have it jacked up

2.) I'm not sure it makes a difference which way you wire it, but green and white wire is attached to the left side (as viewed from the side that the wires go into the connector and the flat side of the connector being bottom) and the brown and white on the other.

3.) If the wire is bad there should be no need to remove the sensor. There is a little seal on the connector that must be cut before you can remove the connector though. I don't recall since I didn't need to remove it but there is a small bolt/screw - maybe it was torx holding the sensor onto the back of the Diff.

I ended up getting two pigtail wires that replace the wire ends inside the connector (available from Volvo). You then butt splice them into the remaining wire, heat shrink anfd be done.
--
Paul NW Indiana '89 740 Turbo 140,000