The problem I had was not understanding how to properly reset error codes. IMHO this is not outlined in great detail on the web.

Even though my CEL was on, A2 read 1-1-1 (no errors) and the CEL was ultimately due not to the engine but to the transmission computer errors (in A1). Thus, I needed to be on A1 to reset. I tried this once, but I kept the button down too long (8 sec). I was advised by a Volvo mechanic to use 5 seconds exactly. The procedure is read the codes, then press the button for 5 seconds. Release and the light will come on solid. Press again for 5 seconds, and the light will go off.

So, the moral of the story is, you need to have A1, A2 or A3 selected when the reset is performed, depending on where the error code is. Stupid me didn't realize that. As to the ultimate cause of this problem, I will not be downshifting as much to "3" in the future. From what I have seen on the web, the blinking error is triggered shifting "D" to "3" more at higher speeds (>40mph). I have also been doing this to pass aggressively (a faster kickdown) and I won't be doing that routinely either. Would like the tranny to last.

Sorry to post so many msgs about this - frustrating working on a poorly documented problem. Now on to the ABS code...