How old is the radiator? Is the temp gauge behavior the same as it was before you replaced the T-stat?

Before chalking it up to a head gasket, I'd do all the diagnostics like pressure tests and compression testing. Red block Volvo engines are pretty resilient. The B23 is a bit more rugged than the B230... mostly because the B23 has slightly more "substantial" rods and pistons.

As for the engine swap, depends on the cost of the junk yard car. A wiring harness is expensive... and so is repairing a head gasket. On the other hand, swapping the 1984 and 1989 bits is a pretty huge project. Here's one problem: LH 2.4 needs a speedometer signal. The '84 will have a mechanical speedo driven by the transmission. The '89 trans won't be able to drive your speedometer, which wouldn't be compatible with LH 2.4... so you'll need the instrument cluster from the '89 and the rear axle, which is the where the speedo sender resides on 1986 and up 240's.

If after you consider all of this and still want to go for it (my hat's off to you!!), I'd use a transmission from a 740 or 940 non-turbo as it will have the lock-up torque converter.

Happy turkey day!
-Ryan





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Athens, Ohio
1987 245 DL 314k, Dog-mobile
1990 245 DL 134k M47, E-codes, GT Sway Bars, GT Braces
1991 745 GL 300k, Regina, 23/21mm Turbo Sway Bars