After putting my car on the computer, my mechanic mentioned that this code was coming up. I don't have any problems with the transmission, it shifts smoothly. MY car has 150,000 miles and he mentioned if he does'nt change it my transmission may break,---- oh, oh oh not to mention he says it may also engage the trac control,once again, Watcha think

The PNP, gear position switch, has nothing to do with the internal workings of the tranny. Probably what the mechanic was refering to was the problem if the PNP fails completely, the tranny may go into "limp home" mode. That keeps the car in 3rd gear and lots of slippling will occure, which heats up the fluid.
You have a warning that the PNP switch is getting dirty and the contacts are no longer precise, so the PNP switch will need to be replaced soon.

Klaus
--
1975 164E running? 1995 854T sweet 1998 V70 R work horse

I've had similar tranny problems only more serious.
It might help to know the code but
There may be a simple fix, mentioned on this board several times
Turn the ignition key to position two (II) without starting the car.
put your foot on the brake to release the safety switch and move the shift lever from park to low 30 to 50 times
That "may" clean the contacts on your gear position sensor.
It may not and the problem could be something else. Knowing the code would help
If you need to replace the switch the cheapest I found was about $85 through FCPGroton, I think.
You can search this board for posts about replacing the sensor aka PNP switch