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Ok, I'm not well versed in the differences and similarities between ATF and Power steering fluid, but I am familiar with the different types of ATF. Consider the following:
There are 3 major types of ATF on the market:
1. Dexron/Mercon (GM and Ford respectively)
2. Type F (many import and Japanese)
3. ATF+3 (Chrysler)
Each automotive manufacturer has their own specifications and tollerances. Inside their transmissions, etc, they use specific types of clutches, adhesives, rubber seals, plastic parts, etc. When they build their transmissions, etc, they need to use a hydrolic fluid / lubricant that is compatible with the parts contained inside. Since the ATF fluids contain friction modifiers and additaves to preserve the seals, you don't want to mix different types of fluids and possibly cause increased wear or undesired operation.
With that said, let me give you a small example. Ford and GM build their transmissions with similar tollerances, similar gaskets and seals, and use similar clutch materials and adhesives. Both automakers require a fluid that meets certain specifications and fortunately these are very similar between the two companies. Thus, a 'universal' fluid is available to use in either manufacturer's transmissions and is compliant to meet the needs of both automakers. The roman numerals after the name represent the 'later version' of the fluid and it is backwards compatible. My '86 Pontiac calls for Dexron II ATF in the transmission, but I use Dexron III and IV compatible fluids which are currently being sold today.
Chrysler however, uses a different clutch material in their transmissons. They contain different friction modifiers to help the clutch pads grip better, and thus they have their own type of fluid, ATF+3. If I were to dump a few quarts of Dexron/Mercon fluid into a Chrysler-727 transmission, I would expect it to start slipping a bit. It would still be driveable, but not very well and the clutches would probably slip under higher torque loads.
On a friend of mine's 4x4 Jeep Wagoneer, he needs ATF+3 in the transmission, Dexron/Mercon ATF fluid in the Power Steering, and Dexron/Mercon fluid in the transfer case. A different year of the same transfer case uses 85-Weight Hypoid oil and I would suspect that they found one fluid worked better than the other and changed the seals and sensitive parts to accomodate. For the reasons stated above, I never add fluid to a vehicle unless I've read the owners manual or the fluid type is marked on the cap or dipstick of the device in question. Additional note: The prior years of his vehicle used transmissions that were purchased under contract from General Motors (the TH-300) and thus required a Dexron compatible fluid.
Also, Type-F ATF has a different friction modifier that Dexron/Mercon but I'm unsure to what degree. It may only be a small amount and I know very little of the seal compatability issues with this fluid. The most common transmissions to use Type-F are those imported from overseas markets, especially Japan. (I once owned a Toyota that required Type-F, but that's been the only car so far.)
A short testamonial about using the proper fluid in the proper device. Someone close to me recently owned an '87 Pontiac Grand-Am with a manual transmission. The owner's mother added some Dexron/Mercon ATF fluid to it when the transmission fluid was low. About 1 year later, the forks in the transmisson failed and it required a rebuild. The mother was a firm believer of "fluid-is-fluid" and there's no difference between them.
If the owners manual had been consulted, it would have told them to add General Motors SyncroMesh fluid to the manual transmisson. For those of you who are unfamilar with SyncroMesh, it's very similar to 5w30 Synthetic Motor Oil, but comes in a blue bottle and costs about $13 a quart. In this case, a fluid who's primary use is hydrolic, was used in place of a fluid who's primary use is lubrication.
Lastly, in the interests of getting the greatest longevity out of the power steering in your Volvo... I'll be honest, if the owners manual says to use ATF and doesn't specify the type, I'd consult the Volvo dealership. Within the dealership, I'd consult the certified Volvo mechanic who's been there for longer than 5 years and has owned a 240 for at least that amount of time. He will both care about the topic and will probably have the best answer. If he tells you to use Power Steering fluid instead of ATF, he probably knows something you don't and I'd ask him why and what compatibility issues could result with the internal seals.
Needless to say, I will bring up this topic the next time I visit my local dealership. I'm curious myself.
God bless,
Fitz Fitzgerald
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'87 Blue 245, NA 214K
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