The solenoid is down on the tranny. Has two wires going to it. With the engine not running, put the trans in 4th and operate the OD button. You should be able to hear the OD relay click behind the dash next to the glove box. If you glisten down near the trans while someone operates the OD button, you should hear it click. If you do, the electrical system is probably ok. The solenoid could be in need of new O-rings but I haven't had to do that yet.

I did have an OD in my '86 act like yours. I drained out the old oil in the tranny and replaced with REdline MTL. I tilted the car up on the left to allow me to overfill the tranny like we do with the M47 tranny. Anyway, the OD started working like new again. I think that I've only borrowed time before I have to put new o-rings into the OD but it has worked fine for nearly a year now. If you try a search in the archives you'll get lots more info.