When you say - stuck in overdrive - does that mean that the arrow light is on?

If so, you are actually stuck OUT of overdrive - the light comes on when you press the button to lock overdrive OUT - this is for towing or in real hilly country and you do not want the car shifting in and out of overdrive.

Volvo switches are one of their weak links - this is an easy and relatively inexpensive fix if you have a trustworthy technician.

"Any thoughts regarding the root cause of this issue will be greatly appreciated!"

No one can say what the root cause of your issue is until it is properly diagnosed.

One scenario with an identical end result is this:

The extra flexible silicone-insulated high-strand count wire leading from the shifter pan to the bullet connector attached to the transmission at the tailshaft housing loses its insulation after a decade or so of exposure to temperature cycles and oil.

The bare wire inside contacts the transmission while the overdrive solenoid is powered (as it normally is) and this blows fuse 11.

The owner of the car replaces fuse 11 when he sees the OD light on constantly and finds he only has 3 forward speeds.

The wire eventually contacts the transmission and blows the fuse again.

The owner of the car replaces the fuse again, but has run out of 16-amp fuses and uses a 25-amp (blue) fuse.

The wire eventually contacts the transmission and blows a tiny circuit trace inside the overdrive relay unit. The transmission does not shift into 4th (overdrive).

The owner uses the swap technique to determine the overdrive relay is at fault and is replaced. The transmission now shifts again as it should.

The wire eventually contacts the transmission and blows a tiny circuit trace inside the overdrive relay unit. The transmission does not shift into 4th (overdrive).

The owner finds a Volvo forum and discovers this overdrive on his automatic is trouble to many and learns he can bypass it altogether for less money than the cost of another relay.

He installs the bypass but in doing so some dirt falls into the hydraulic passage, and regardless of having eliminated the electric overdrive lockout feature, still cannot get the AW transmission to find 4th gear.

Not sure exactly how the next event occurred but, the owner then becomes a previous owner.

There are a lot of stories on this board with advice on how to, and whether to fix the 240's overdrive-off function.
--
Art Benstein near Baltimore

We're going on a class trip to the Coca-Cola factory. I hope there's no pop quiz.

Does the indicator light turn ON / turn OFF when you cycle the OD button?

Also you could check voltage to the solenoid while an assistant cycles the button ON/OFF.