Thanks to all. Problem found & fixed. Turned out wire(brown)from switch was broken a few inches away from switch. Spliced in a new section where break was. All is fine now. Thanks again.
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' 86 manual sedan nearly 200,000 and ' 87 auto sedan about 120,000

Check the plunger on the switch sometimes they get a small groove and will stick down. This happened on my '85.

I assume you mean it won't come on when it should? Try tightening the Phillips screw on the switch under the ebrake handle. I think the plastic ebrake cover needs to be removed for this. The switch is grounded to the sheet metal via that screw...if it's not tight, intermittent ground.
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Bob (son's 81-244GL B21F/M46, dtr's 83-244DL B23F/M46, my 94-944 B230FD and 89 745 (LT-1 V8); hobbycar 77 MGB, and a few old motorcycles)

The wiring from the switch to the dash light is not too complicated, not much distance to cover. It is a single wire from the instrument cluster to the E-brake switch. Lifting the brake handle closes the switch and makes the circuit connect to a ground.

If the wire touches a ground anywhere the warning light will come on. In the Volvo Service Manual Wiring Diagrams for the 1984 240 the wire is brown. It connects to the instrument cluster through the half-circle connector pin #2.

Good Luck,

Bob

:>)

My parents had the same issue in a 86 sedan. It turned out the windshield had been replaced with the old style seal (with the chrome strip), which resulted in leaks into the dash which messed up the warning lights. The new style seal fixed the leak, but I'm not quite sure how they fixed the light. Sorry this isn't super helpful, but may be something to look for, if you've had the windshield replaced lately.