Some transmission issues
 

1997 850 t5, automatic (pretty sure all turbo 850s in the states are auto, but, just so theres no confusion)

So, just got the car, seemed to only engage reverse when cold. Flashing arrow all the time. I got the bright idea to throw the gear selector back and forth to see what would happen. now it seems to be stuck in high gear in forward, but, I can get a little out of reverse when i rev it.

Seems like some combination of perhaps really dirty fluid, clogged valve body and maybe some tcm codes causing it to limp? im not super familiar with volvos YET but, in my experience, just flushing the trans can cause worse problems so i dont want to jump into that right off. also my research shows that there is some sort of "pnp" valve that causes people issues- could it cause this?

Im fairly sure the trans is still somewhat useable. if it were toast it wouldnt cause these intermittent issues. but i welcome the advice of some long experienced volvo guys!

I would replace the fluid. If it's going out, its going to go anyway.

Chances are you have a bad PNP switch that needs to be rebuilt or replaced.