Look in the 700-series FAQ's re. Auto or Manual Transmission (as appropriate) - Overdrive.
You'll find lots there.
Most common problem is a broken wire leading to the solenoid.
I had one with an intermittent wire break for a while (until the wire broke completely). The O/D went in and out on its own, usually on bumpy roads.
Wire goes (in my '86 and '89 Auto Trans 240's) out the shift lever box at it's front end, down past the driveshaft on the passenger side. Goes forward along the pass. side of transmission, crosses somewhere, then goes along driver's side of trans. fluid pan to finally meet the solenoid. I had 2 of these wires break where they go down past the drive shaft. Fixing is a pain unless your hands are the size of a five-year-old's.
I've done the repair twice, and did a better job the 2nd time, as follows - - -
IF you have a broken wire - -
My solution - Push new wire forward out the front of shift lever box using needle-nose pliers. Push out about 6" or so. Then get under the car, find your new wire, pull it down, and join to what's left of the original wire. Use good connectors, and shield with vacuum tubing down below as needed to protect it.
Of course, splice new wire onto the old in shift lever box. It's white on the cars I've seen. Wire comes down from glove box area (from relay) into the shift lever box. It's the only one there that has no other function in the shifter box. The others are for the indicator light, and for gearshift position detectors (auto trans) for Reverse and Park/Neutral, and a ground wire.
Pushing it out the front of shift lever box into the tranny tunnel using pliers is a pain, but this is better than removing the rubber grommet on the shifter box, which makes pushing wire thru a real easy task. Problem is, you'll never get the grommet back in, and so will get engine noise and wind up thru the shifter box. That's how I did it the 1st time. I used some putty to substitute for the gasket, which worked OK. Second time, I used needle nose pliers to push wire out thru grommet.
I'd probably use a bit of "lamp cord" or "zip cord" for wire. Or automotive wire from a parts store. 18 or 16 gauge should be OK, I think that either is larger than what's in the car (the white wire). Use butt connectors for the splice if you have a crimping tool to fasten the crimp connector. IF wire is too thin for the crimp connector, leave the exposed part of wire about 2x the proper length, and fold over before sliding into connector. This can happen with the long wire snaking along tranny, as you have no control over that wire's diameter.
If you don't have a decent crimp connector tool, this is a good time to get it. Figure that a shop would charge you $200 for a solenoid plus installation. The crimp tool is $10-15. Probably all you need. If you're new to terminal crimping, practice on scrap wire bits first. No fun doing it over and over down there in the tranny tunnel. It's worth the cost of a bit of wasted wire and connectors.
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