Soooo ronery in my own thread here...

Anyway, I took apart the PNP sensor yesterday to check out the guts and give it a cleaning. I found the contact furthest from the base of the arm was seriously worn, giving an uneven contact surface. I used a small file to flatten it back out, then pulled out the springs slightly to give them a little more spring. Cleaned it up, lubricated with a di-electric lubricant and put it back together.

I read some threads here about using the reverse lights to properly position the switch, but that seemed an imperfect method. Obviously the Volvo Special Tool is the ideal approach, but I don't own one. I figured the alignment process was actually supposed to align something, but what?

On inspection, it seemed pretty clear what the alignment tool was in fact aligning so I made the image below to help visualize it. I used a multimeter to "map" the contacts inside the switch with the connector pins, and found that in the proper position the "wiper" should be making contact on pins 6 and 7. Those contacts are pretty small, so the proper position isn't subject to a lot of adjustment - you can see that in the image. My photoshop isn't perfect (my camera hand isn't that steady :), but you get the idea.

With a multimeter on pins 6 & 7 of the PNP connector you can get a VERY good alignment, which saves having to hook up the battery & using a friend or mirror to watch the reverse lights.

Does this work in practice? No idea, but it seems like it should. Will this fix my problem? No idea, but probably not. The transmission fluid looks TRASHED. Gonna change that, then see how the test drive goes.