That plastic piece should be replaced ASAP. It contains the check valve that keeps some vacuum in the booster when the manifold vacuum is low, such as on acceleration.

The crumbling insulation is another problem. The wires from that gray connector were made separately from the rest of the main wiring harness and use a type of insulation that is environmentally friendly. Unfortunately that stuff wants to return to the environment far too soon. You will need to address the problem, in the meantime don't touch or move the harness. If things run OK now, the crumbling hasn't resulted in any short circuits, yet.

Usually the way to do it is to bypass the wires, putting in new ones from the connector to the destinations. The connector can be unhooked and opened up, so the old wire terminals can be clipped off and attached to the new wires.

I have the Volvo Service Manual Wiring Diagrams 240 1985 to refer to. It is part TP 30808/1 4500 7.85. Look at www.volvocars.com/lit and see if you can get one.

The terminals are in little pigeon holes in the connector, and the holes are numbered. Here is the layout:

#1..SB....Oil pressure sender (SB = black)
#2...Y....Water temperature gauge sender
#3...R....Alternator D+/61 (the thin red wire on the alt. back)
#4........Empty -- used on carb. models
#5..BL-Y..Starter solenoid (two thin wires there, note how they attach)
#6........Empty -- used on Diesel models
#7........Empty -- used on Turbo models
#8........Empty -- used on Diesel models

You can run the wires form the connector across the firewall and down the fenders and then to their destinations. Leave the old wires in place, both ends will be cut off anyway.

Good Luck, Study Hard,

Bob

:>)