850 Wagon Transmission Woes
 

I drive a 1996 850 GLT Wagon with automatic transmission, I was parking on a hill and felt the reverse gear go... When I checked the trans fluid it had a good level but had a brown color. My forward gears work fine and the car shifts properly but there is no reverse. On a level ground I can hear it engage the reverse gear but it doesn't have any torque, it has a VERY weak inching backwards. I have a horrible feeling this is a transmission failure and it's too late to do anything but change the transmission wholesale, but I'm hoping someone here has another opinion.

since you say you can feel some reversing while on level ground, sounds like a gear is spinning on a shaft versus a condition where the shifter can not actuate the transmission (ie shifter, PNP, Solenoid etc problems). I'm thinking the tranny is toast but you can try dropping the pan to inspect for any metal bits (ie gear components = bad) or black bits (ie wet clutches = bad).

Will do, wondering whether either of these bad scenarios is one that leads to not having the change the transmission completely... All I can do on my own is drain the fluid and transition new trans fluid... Is that worthwhile or should I just bring the damn thing in to the mechanic and get an actual opinion?

given the symptom of no reverse but ok driving forward, I'd lean towards a mechanical fail vs say solenoids/valve body or the wet clutches. Have you gotten a shop estimate on the hours to swap out the transmission? It should be pretty easy to find a replacement (search car-parts.com for recycle yards) and generally the 850 automatics are fairly reliable. A quick search suggests a used transmission can be had for $250.

True, I've looked and that's the lower end. Brand new tranny for 96 850 is 700, labor would run about 700-1000. All in for auto trans swap would be about 2k, but no guarantee new tranny would not also seize up down the road... Thinking this might be a good time to invest in a newer vehicle, like a V70 or CX70. I've been leaning towards a 2006 CX70 that's going for 7000. What's your opinion on these cars?

I've owned both an AWD (early Quattro) and FWD and unless you live in snow country, I think the advantage of AWD is oversold. Additionally the XC70s sit up higher as well so handing is somewhat diminished (popular add on is the IPD HD sway bars). As with any used car the key is knowing the maintenance history. A 2006 will be due a timing belt (10 years or 100K miles) so that'd be the big hit. $7000 may or may not be a fair price depending on condition, miles etc. I'd also recommend a professional inspection if buying from a private owner.

Where do you live?