Richie:

All the fourth gear switch does is ground one of the terminals on the relay so it can "pick up" and send current to the solenoid, engaging the overdrive. The switches do wear out (I've had two go bad at around 150-175K or so) and can be purchased new from IPD for only $21 or so. You'll need a 22mm deep socket to remove it. It's sort of on the top right hand side of the transmission. If the replacement tranny is already in the car (I assume that it is), it's easiest to loosen the two tranny crossmember bolts on the driver's side of the car, then remove the two tranny crossmember bolts on the passenger side and let the transmission hang down a bit (might be a good idea to have your floor jack under the output shaft flange at this point); you should gain enough access to get the socket on the switch and remove it.
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Mike W., '79 242GT (my project car), '85 245DL (son's project car), '87 245 DL (my daily driver), '90 244DL (son-in-law's daily driver), '91 744T (wife's daily driver), '94 944T (daughter's daily driver), Largo, FL