I have a 88 240DL it hasn't had any issues until this one. One morning the overdrive lockout light was on when i put the key in the ignition; and the switch on the shifter did nothing. I opened the fuse pannel and the fuse was blown. I replaced the fuse put the key back in and the light went out, and I could turn it off and on with the button.

I decided i'd take my 06 s40 to work instead, it's a stickshift (i really hate automatics). During the day my girlfriend took the older volvo out and the light came back on. Checked again and the fuse was blown. I replaced it and started it a few times, made sure it would turn off and on and left it. I didn't take it for a test drive.

Yesterday the light came back on and the fuse was blown.... I'm curious if maybe it's the relay instead but I don't know where the relay is in the 240.

Thanks

 

Check the wiring where it goes through the body by the transmission.
It is known to have the insulation fall off.