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It sounds to me like the downshift cable is stuck or binding.
Inspect it, adjust if needed, and possibly have it replaced. That would cause what you describe. However that may not be the only problem- there are many many posts on here describing overdrive relay service.
The 7/9 FAQ has details on these transmissions, and how to service the relay and solenoid for overdrive- check that out before proceeding.
And PLEASE do yourself a favor and DO NOT go to a chain transmission shop- go to a Volvo specialty shop instead, they'll take care of ONLY what you need fixed. The AAMCO guys just want to put in rebuilt transmissions and it usually won't require anything like that.
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Rob Bareiss, New London CT ::: '87 244DL/M47- 225K, 88 744GLE- 209K, 91 244 183K. Also responsible for the care and feeding of: 88 745GLE, 229K, 88 244GL, 146K, 87 244DL, 235K, 88 245DL, 236K
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