On a side not, I remembered that I rarely ever switch the OD on/off, like 1 time a year rarely, so today during city driving I clicked the button a few times over about 5 min of driving.

I don't think you can tell much about the OD blocking or drop-out (which is what the so-called OD switch is for) in city driving.

You need to be up around 40mph or better. If it works, the switch (dash light ON) means the tranny will not shift up into 4th gear. Or if it is already up in 4th, it will drop down to 3rd.

The "up Arrow" light is suppsed to indicate that the higher 4th gear is locked out (till you switch the light off with the button).

Another way to look at it is that you can't switch the OD on. It will always go into OD 4th gear automatically. All you can do is prevent it (by clicking the light ON before you start to move), or take it OUT of OD later, when you need to shift down for any reason—like on a steep winding road.
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Bruce Young
'93 940-NA (current) — 240s (one V8) — 140s — 122s — since '63.