My experience with the symptom you are describing-----Except Ignoring the Shift Light. A 'red herring'.
Besides an 87 Wagon with a 5 speed I own an 80 with a 4 speed.
Years ago on the 80 Sedan--4Speed...
I did a full timing gear Plus 3 front seal replacement, the 120K Volvo recommended service.
I've never replaced the Rear Main seal. When I put in a new clutch DYI in my garage a few years earlier---I told myself not pulling the flywheel and RMS this time---next time I'll pay my mechanic.
My thinking regarding the rest of this analysis was:
that by renewing the Front Seals...any potential Seal Leakage would be forced to the Older RearMainSeal.
Several months later...when ever I 'flogged it' after a traffic light OR tried to accelerate up a hill in 3rd....the engine would rev without gaining speed.
I'd back off the gas and the clutch would 'catch'.
So ignoring the Shift Light----
Assume you have as oil contaminated clutch disc. When you do the clutch be sure to renew the Rear Main Seal---as well as resurfacing the flywheel.
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