Do you have the Automatic Transmission or the M46 Manual?
Each has its own set of diagnostics and repairs.
The following applies only to the electrical controls of the M46 manual transmission.

What follows is a step by step process which will help you find the problem based upon the OD light not illuminating. Once or if you find the problem e-mail me for more help if you need it.

A and first and foremost. And this is common in Volvos. Check the fuse. Even though the fuse looks good, Remove it from the cradle and clean the ends of the fuse and the socket it fits into. It should be fuse # 11.

1. While parked, engine and radio off, ignition switch on, gear lever in 4th gear, push the OD button about once overy two seconds on top of the gear knob repeatedly while listening near the top left side of the glove box. Do you here any faint clicking coming from that area?? NO the relay is not being energized. YES the relay is being energized.

2. If NO to #1. Push the gear lever to the right and rear and hold it there while pushing the OD button. If the relay clicks and the light comes on the problem is a bad 4th gear switch. Replace the 4th gear switch on the side of the transmission.

2a. Turn the ignition off and remove the glove box. Open the glove box and remove the screws around its outside. After it is out just inside the opening to the left is a relay (plastic rectangular thing clipped to the back of the dash). Remove this from the dash and remove the relay from its socket. On the bottom of the relay you will see some numbers. Match these numbers to the socket and check the follwing. Connect an ohmeter between the blue (#15)and brown (sometimes black) (# 86) wires in the relays socket. Pushing the Gear switch button should complete the circuit. If always open the switch or the wiring to the gear shift button is bad. Replace or repair.

2b. Check between the red wire (#87)and ground with the gear shift in 4th. This should be a complete circuit. If open check the wiring to the 4th gear switch and repair or replace the 4th gear switch if bad.

2c. Check between the black wire (# 31) and ground. If an open circuit trace the black wire to the place where it connects to the dash and clean its contact with the body.

2d. IF all the above are good and you are confident it is not a bad relay recheck the soleniod and the wiring to it on the transmission. The yellow wire (#87) in the connector should show some resistance to ground WITH THE OD LIGHT IN THE DASH REMOVED. The light and the soleniod on the transmission are in parallel and to check just the soleniod you need to remove the dash light.

3. If YES to #1 and the soleniod on the transmission also clicks with the relay you most likely have low transmission fluid which could cause even new solenoids or relays to fail or bad seals on the OD actuator pistons inside the OD unit. Either of these are usually indicated by the OD engaging then dropping out without reason for a period of time before full failure of the OD piston seals.

Any other questions e-mail me direct.