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Darryl and Jim,
I have seen this problem happen over and over, here on the board and at my volvo dealer. Darryl this is going to cost you about $350 big ones to fix. The PNP switch also known as the gear selector switch has failed. The check engine light will not go off becuase the tranny has set a code. Darryl have you noticed that your car starts off in a different gear when these lights are flashing. Your car might feel like there is a serious loss of power when accelerating from a stop? Once the car is warmed up the light is okay and dosn't flash.
Make sure that volvo does this fix because they have experience with this problem unlike other independant shops. If you have any other questions please feel free to post or Email me.
Brandon
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