I would go with the 3.73 over a 3.54. 240T with M46 used them without any problems. Someone with one should be able to check the Volvo owner's book and tell you what the rpm would be at 60 mph. It will be slightly higher, and your fuel economy slightly lower. Just make sure the donor axle has decent emergency brakes, axle bearings (not uncommon for them to go around 200k), and the pickup for your electronic speedo).

I would go for a 3.91 over a 3.73, because I like performance. The 3.91 was auto trans spec in later years. A friend put a 3.91 in his 240T with M46 and noticed the difference in performance. But that would make 1st gear pretty short and mileage worse.

You could always look for a 90-95 Turbo to replace your car.

Philip Bradley