To find out what the problem is for sure you will need to get the system scanned. Unfortunately, I don't think an absent VSS signal will show up on standard Auto Zone scanner and you will need to go either to a dealer or a shop that has a Volvo Scan Tool. My guess is either the vehicle speed sensor or the instrument panel itself. The vehicle speed sensor is located more or less on the center point of the transmission, between the half shafts. I would start by checking the connector to it and giving it a spray with contact cleaner.
'94 850 N/A '96 850 N/A '96 Platinum Edition Turbo '98 S70 T5 '99 V70XC - RIP Killed by a drunk driver. '99 V70XC - Nautic Blue Previous: 1989 740 GLT 1986 740 GLT 1972 142 Grand Luxe
I also think it is gotta be that sensor, because two days ago the problem fixed by itself. I drove for couple days without any problem. But today it stopped working again.
I will try to find that speed sensor and clean it.