I recently noticed that my '84 240DL is capable of 105mph in 3rd gear while sounding like its going to blow up and reving at 6000rpm. While in 4th gear, the car can only go 95mph at about 3500rpm. Why is this? Is my transmision messed up or are all Volvos geared like this?
P.S. This was tested on a track. On public roads I rarely go over 75mph.

90mph at 3500rpm in 4th gear? You must have an automatic tranny.

Yeah, the normally aspirated 240s are geared very tall, especially the sticks. My '85 245 has a 3.31 rear end and top gear (this is a 4spd+OD stick) is practically useless below about 70mph. Have to downshift into 4th every time I hit an incline or I start to lose speed. I guess that they had fuel economy in mind when they did this--and it does get excellent mileage, almost 30mpg on a long trip at highway speeds--but it makes the car incredibly sluggish off the line and difficult to drive in traffic.

I'd had it up to 110mph in 4th gear, at about 5200rpm. Like you, my speed in top gear is seemingly limited to about 90-95mph. But keep in mind that my 4th gear ratio is approximately equal to your 3rd gear ratio (1.1:1), and my 5th/OD ratio is comparable to your 4th gear ratio. Confused? :-)

-=Bob=-

You dont have the leverage to go fast in 4th. Frictional loss, wind resistance etc.
By dropping into a lower gear you are getting more power to the rear end.