Hi,
Check here for more info with pic of where to grind groove with Dremel on the solenoid:
http://www.brickboard.com/FAQ/700-900/TransmissionAuto.htm#OverdriveRelay
and here is an even better picture:
http://www.brickboard.com/GALLERY/volvopic.htm?id=9174
A couple years back my solenoid fell apart on my 90 244 and I had the same symptoms you have. Along with the solenoid the wiring was also sheared off. I didn't need the OD function so I bought the bypass plate quickly (before I know that there was detailed documentation on where to cut a failed plate to perform the bypass). Read the above FAQ link for details on removal. Be careful with the two bolts as they are installed at a low torque value. Personally I didn't have to lower the transmission. I just put the front of the car on jackstands, blocked rear wheels and removed the bolts pretty easily-I do have skinny arm however and small hands which probably helped.
Hope that helps,
Travis
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