I've done this on both of my 240's. The wiring in the shifter and down to the OD solenoid allways gives out over time from either chaffing or melting from the heat of the exhaust. Here is a cheap easy way to fix it.
1. you will need an extra defroster switch (the NON-TIMER type) from an older 240 or some kind of dashboard switch. The Volvo switch looks more at home in the dash. 2. about 4 feet of wire. 3. Some heat shielding or wire loom to protect the wire underneath from heat and moisture.
Bypass everything all together. Run a hot wire from the fuse panel with a spade connector to the OD's fuse. Take the wire up through the dash to the spare defroster switch. Run another wire through the floor directly to the overdrive solenoid. It's grounded through the transmission case so there's only one wire to deal with. It's either on or off... that's it. Cheap fix that will last about as long as the car.
Ben