Sounds like the PNP. I have had to change it on my two 850's after the "cleaning", shifting the gear lever, did not work anymore. The part is about 100 dollars online from some of the companies that advertise here. I am not sure what the labor would be. It is a pain to let it warm up by driving for a bit and then shutting it off and restarting, but I did that for most of a winter.

There is a site, Volvospeed.com that can show you pics and how to do it yourself if you are so inclined. It is a bit harder than it looks to do yourself for the first time. The hardest bit is getting the wiring harness to seperate.

good luck

Do the cleaning of the PNP ,and then do a flush. It is easy.. And the rewards are good.

try cleaning the PNP switch with the directions on volvospeed, they will act up when it gets cold.

http://www.volvospeed.com/volvo_performance.php

from volvospeed:

The requirement to replace the PNP switch is usually prompted by the up arrow on your instrument cluster flashing, maybe the mode select switch flashing between modes and possibly the turning on of the check engine light. You might also notice that your car is stuck in 3rd gear. The first thing to do for a 313 code recovered from the A-1 diagnostic socket is to clear the code and then do what I call a ratchet cleaning. Move the shift lever from "P" to "L" rapidly 15-20 times, this can clean up the copper contacts on the inside of the PNP switch. Some shops will do the ratchet of the shifter without mention when doing a service, (I do). The changing of the weather from fall to winter also causes the fault to show up a lot.

it may help.

Dan