Easiest way to troubleshoot a neutral safety switch is to bypass it.

The switch is located in the tranny tunnel - pull the cover - it's the delta shaped device.

Unplug the switch and jump the (usually) pink wire to the (usually) blue or blue green wire in the plug. Make sure the trans is in Park, then try the starter.

There are a couple of things that can affect the NSS, the most obvious being that it can fail itself. However, a loose shifter that fails to fully engage the switching mechanism in the switch can simulate a switch failure.

One other symptom of a failed or failing NSS is no reverse lights - the switch for those is in there, too, with a (usually) blue red wire bringing the power in and a (usually) black wire taking the power out of the switch and to the reverse lights.

I just replaced one in my daughter's 89 740, took fifteen minutes. I think the part runs about fifty bucks.

Hi Mike,

I have an undisclosed rat in the woodpile that suddenly delivers
"no cranking". Then after shorting the two starter terminals with a large
screwdriver the SOB appears fine for weeks or even months only to reoccur.

The circuit for the Starter solenoid starts at the pos terminal of
the battery. Check that the small wire is clamped on tight, as it has
a tendancy to get loose. That wire joins two other red wires at a
terminal (3 red wires) near the ECU. The two other red wires go to the ignition switch "pins 30"
Then the ignition switch delivers pos volts via a pink wire to a connector at the interlock switch harness pin 4.
The Blue/green from harness connector pin 3 goes on to connector E pin 1
at the Left A post, then to Connector D pin 5 at the left suspension tower,
Then the Blue/Green to the starter solenoid (Small wire)

One problem in locating the gremlin is that the solenoid needs plenty of
current in order to pull in. So a crappy connection somewhere may look fine
with an ohmmeter, but not deliver enough amps to pull the solenoid.

I've swapped out the interlock switch and fixed the pos terminal at the
battery. It may be a bad connector D or E , I haven't been annoyed enough
to tear into that since the SOB generally works and it only takes a second to
jump the starter.
It doesn't seem likely that the solenoid itself should be the culprit, but
you can't rule out anything until the thing is fixed for sure.

I hope this helps some, Bill

PS: You really want to get the Volvo wiring diagram (Electrical Service-
manual) for your car before Ford sees that it goes out of print.
The 89 740 book is Volvo # TP 31383/1 You can order it online or
get it at your Volvo dealer. It's worth it's weight in Gold, and there's
no competition with Chiltons, Haynes, or whatever.

Go here and read first. The FAQ is often helpful.

http://www.brickboard.com/FAQ/700-900/ElectricalStarting.htm

It'd be good if there was more info such as, do warning lights come on, do headlights come on, things like that. The NSS does seem like a possible candidate though.