Martin,
That's a nice looking 240 you have there. Reminds me of how my silver Turbo looked before the clear coat died. Speaking of my silver Turbo, I converted it to manual a few years back. Took the EZ route and used a same year donor car with 4spd + OD. The M46/OD unit is very strong - mine has 200k behind an intercooled turbo motor with no problems. The OD problems tend to involve external parts like relays and wiring - not the unit itself. The one complaint you'll hear about the M46 is the creeper gear Volvo uses for 1st. Great for tractor pulls, but in normal use you need to shift into second at very low speeds and the engine bogs down due to the wide difference in 1st and 2nd gear ratios.

The turbobricks site has information about installing the Toyota Supra 5 speed into Volvos to solve this problem. They don't like the Volvo 5-speed because it can't handle a worked turbo motor.